Italian banks boost European shares on prospect of new elections

  • Reuters
  • Stock Market News
Italian banks boost European shares on prospect of new elections
Credit: © Reuters.

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LONDON, May 28 (Reuters) - Italian banks led a sharp European stocks rebound on Monday after the failure of anti-establishment parties to form a government lifted the euro zone's peripheral markets with the prospect of fresh elections.

The Five-Star and League parties abandoned efforts to form a government after Italy's President vetoed their choice of a eurosceptic economy minister, sending Italian bond yields lower and Italy's main FTSE MIB stock index sharply higher, while the euro also made gains. FTSE MIB .FTMIB had climbed 1.4 percent by 0720 GMT as financials and utilities stocks surged.

Italy's banks index .FTIT8300 jumped 3.1 percent, set for its biggest gain since January. Unicredit CRDI.MI , UBI Banca UBI.MI , Banco BPM BAMI.MI and Intesa Sanpaolo ISP.MI rose 2.2 to 2.8 percent.

Utility Enel ENEI.MI , which had also been hurt by investors pricing in some of the coalition's policies on renewable energy, traded up 1.9 percent.

Banks fuelled a 0.2 percent gain in Europe's STOXX 600 .STOXX , while Germany's DAX .GDAXI rose 0.5 percent. Britain's FTSE 100 .FTSE was closed for a holiday and with U.S. markets also closed, trading volumes were thinner.

Spain's IBEX .IBEX also rose 0.7 percent as the rally spread to other southern European markets. Spanish stocks had fallen sharply on Friday on concerns Prime Minister Rajoy would face a no confidence vote.

Financials and utilities led the recovery in Spain too, with Santander SAN.MC , BBVA BBVA.MC and Caixabank CABK.MC top gainers along with Iberdrola IBE.MC and Gas Natural GAS.MC .

Danish biotech firm Genmab GEN.CO fell 24 percent after it ended combination trials of its multiple myeloma drug Darzalex with Tecentriq, citing "no observed benefit" and an increase in deaths after the combination treatment.

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