European Bank Shares Rally as Health Concerns Ease

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European Bank Shares Rally as Health Concerns Ease

Recently-battered European banks are experiencing a rally as tensions over the sector's health subside. Shares in Deutsche Bank, for whom a spike in the price of insuring its debt triggered a sector-wide sell-off on Friday, are up about 5%. This rise is helping the Stoxx 600 Banks index to rise 1.6%. The calmer tone is supporting risk appetite more broadly, leaving the DAX 40 in Frankfurt up 1.4% and London's FTSE 100 adding 1%.

Despite the optimism, many analysts remain wary of calling the all-clear. Richard Hunter, Head of Markets at Interactive Investors, said, "It remains to be seen whether this relief rally is justified until such time as the planks of banking uncertainty can be removed once and for all, leading to an improvement in investor confidence which is currently in scant supply."

Novartis shares are leading the big-cap gainers, up 7% after the Swiss pharma giant revealed positive breast cancer trial results. In bonds, the 10-year German sovereign yield is up 9.9 basis points to 2.228%. This reflects reduced haven demand as sentiment improves, and news that the Ifo business sentiment survey improved in February for the sixth successive month.

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