January 16, 2019 / 10:07 AM / 3 months ago

UPDATE 2-Brexit deal defeat boosts European banks

    * UK parliament deals crushing blow to Brexit deal
    * FTSE 100 down 0.5 pct, Euro Stoxx up 0.5 pct
    * Bank shares jump

 (Adds closing prices)
    By Helen Reid
    LONDON, Jan 16 (Reuters) - European shares closed the day in
positive territory on Wednesday as British Prime Minister
Theresa May's resounding defeat in a parliamentary vote on her
Brexit deal gave a boost to continental banks.
    Analysts and investors interpreted the outcome as a positive
for the market, making a "softer, later" Brexit more likely
despite the uncertainty ahead of a no confidence vote in May's
government later on Wednesday. 
    The Euro Stoxx finished the session up 0.5
percent, with most indexes on the continent in the black while
London's FTSE lagged, down 0.5 percent, as a firming pound
weighed on multinational exporters which make the lion's share
of their earnings in foreign currencies. 
    The FTSE 250, a benchmark for domestically exposed
UK firms, rose 0.3 percent with homebuilders and local retailers
making big ga8ins. 
    Euro zone banks shares were the biggest boost to
European indexes, rising 2.4 percent to their highest in over a
month as investors bet that a disruptive no-deal Brexit was less
likely after the parliamentary vote.
    The rally in Italian banks, led by Unicredit up
over 10 percent, helped Milan's FTSE MIB outperform
peers with a 1.6 percent rise.  
    Some analysts cautioned however that the new found optimism
might be short-lived. 
    "Unfortunately, everything remains possible: new elections,
an extension of the deadline for Article 50, or even a second
referendum," said Stefan Kreuzkamp, chief investment officer at
DWS. 
    In Germany, Deutsche Bank shares spiked higher in
afternoon trading after a Bloomberg report said regulators would
prefer the German lender to merge with a European rival rather
than local competitor Commerzbank.
    Shares in Deutsche Bank, which hit their lowest level on
record last month, were up 8.4 percent while Commerzbank
 share also rallied 7.4 percent.
    Elsewhere in Europe results and dealmaking news drove moves,
with stocks shrugging off the night's political developments.
    Danish freight company DSV climbed 5.8 percent
after it made a bid for Swiss logistics company Panalpina
 valuing the company at $4.1 billion.
    Panalpina shares soared 27.7 percent after the bid which, at
170 Swiss francs per share, represents a 24 percent premium to
the stock's closing price on Tuesday.
    "We can see the strategic logic for DSV, as the deal would
give them a large opportunity to scale their process and IT
capabilities. But a deal of this magnitude will not be without
risk," wrote Bernstein transport analyst Daniel Roeska.
    Norwegian aluminium maker Norsk Hydro rose 5.2
percent after it said Brazil's northern state of Para lifted a
production embargo on its Alunorte alumina refinery.
   
 
 
 
    
 (Reporting by Helen Reid, editing by Danilo Masoni and Angus
MacSwan)
  
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