Banks lead way as values soar to 12-week high

Eurostoxx 50: 2,476.92 (+141.86) Frankfurt DAX: 6,337.84 (+321.77) Paris CAC: 3,368.62 (+199)EUROPEAN STOCKS rallied to the highest in 12 weeks yesterday, after the region's leaders agreed to expand a bailout fund to halt the sovereign debt crisis.

The Stoxx Europe 600 Index rose 3.6 per cent at the close. The index has rallied 16 per cent from this year’s low on September 22nd amid growing speculation that policy makers would agree on a solution to the region’s debt woes.

“Some of the fear, which has been the dominant factor in the market, has been removed,” said Pierre Mouton, a fund manager at Notz Stucki and Cie in Geneva.

“Europe came to an agreement and has a plan. This allows financial stocks to rise because there is no longer the spectre of nationalisation. There is a sense of relief for the banking sector.”

European leaders said the plan points the way out of the debt quagmire, even if key details are lacking. Last-ditch talks with bank representatives led to the debt-relief accord, in an effort to quarantine Greece and prevent speculation against Italy and France from ravaging the euro area and wreaking global economic havoc.

“A lot of details are still to come out,” Ralph J Silva jnr, a strategist at Silva Research Network in London, said. “The overall perception I have is that it’s positive. It’s a very good start.”

BNP climbed 17 per cent to €35.13.

Deutsche Bank advanced 15 per cent to €32.80.

Société Générale, France’s second-largest lender, rose 23 per cent to €23. The bank said it will meet mid-2012 capital requirements “through its own means”.

Credit Agricole, France’s third-biggest bank, soared 22 per cent to €5.94, its largest advance since September 2008.

Greece’s ASE Index jumped 4.8 per cent, led by banks. National Bank of Greece, the country’s biggest lender, surged 6.1 per cent to €1.91. Alpha Bank soared 3.9 per cent to €1.08.

BASF, the world’s largest chemicals maker, rose 7.5 per cent to €54.37, the biggest increase since April 2009.

Michelin Cie jumped 5.1 per cent to €54.94. The company said third-quarter revenue rose 11 per cent to €5.14 billion.

Daimler added 3.1 per cent to €39.07. The worlds third-largest maker of luxury vehicles rose after predicting higher fourth-quarter profits. – (Bloomberg)