PARIS, June 15 (Reuters) – The main European stock markets rose at the start of the session on Wednesday, driven by banking stocks, after the announcement of an exceptional meeting of the Governing Council of the European Central Bank (ECB) on the evolution of the bond markets. Investors are also awaiting monetary policy announcements from the US Federal Reserve in the evening.
In Paris, the CAC 40 gained 1.28% to 6,026.17 points at 08:18 GMT. In London, the FTSE 100 takes 0.53% and in Frankfurt, the Dax advances by 1.2%. The EuroStoxx 50 index is up 1.33%, the FTSEurofirst 300 0.43% and the Stoxx 600 0.96%. The Governing Council of the ECB will hold this Wednesday, at 09:00 GMT according to several sources, a surprise meeting to discuss recent releases in the government bond markets, highlighting the institution’s concern over the increase borrowing costs of some countries in the bloc, especially the most heavily indebted ones.
The ECB’s announcement last week of its intention to engage in several rate hikes this year in the face of inflation amplified the yield spread between Italian and German bonds, which hit a peak since April on Tuesday. 2020 at 252.9. It is now back below 240 basis points, with the yield on the ten-point Italian BTP falling ten basis points while its German equivalent is up slightly.
Italian bank stocks, hurt recently by fears over Rome’s rising cost of debt, rebounded in early trade. Unicredit, Intesa Sanpaolo and BPER Banca take from 3.55% to 4.54%. The European banking sector as a whole took 2.88% and that of the euro zone 3.55%. In Paris, Societe Generale (+3.30%), BNP Paribas (+3.59%) and Crédit Agricole (+4.06%) are among the biggest increases in the CAC 40. “It is clear that the market anticipates some sort of intervention,” said Teeuwe Mevissen, senior strategist at Rabobank. If the ECB refrains from giving important information, the massive sale of bonds could continue, underlined Charalambos Pissouros, at JFD Brokers.
Investors are preparing in parallel with the announcements, at 6:00 p.m. GMT, from the Fed, which could accelerate the rise in its rates. Following the publication last Friday of higher inflation than expected in the United States, investors have considerably revised their expectations of Fed rate hikes. According to the CME Group’s Fedwatch barometer, the markets estimate a 99.7% probability of a 75-point rate hike on Wednesday.
(Writing by Laetitia Volga, editing by Kate Entringer)