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Banks underpin rebound for European stocks


European banks bounced higher as merger speculation returned to the sector, which helped the region’s equities move up off last week’s 12-session closing low for the Stoxx 600.

The Europe-wide benchmark rebounded by 0.5 per cent, with the index tracking its banks outperforming with a 1.3 per cent advance. It came after fresh speculation of a merger between German lenders Deutsche Bank and Commerzbank. Their shares rose 4.5 per cent and 6.6 per cent respectively, while Frankfurt’s Xetra Dax 30 gained 0.3 per cent.

Wall Street stocks followed, with the S&P 500 up 0.7 per cent in early US trade.

The pound recovered from a three-week low as investors continued to watch the UK’s fraught Brexit politics. Sterling’s ability to hold the $1.30 level remained associated with a managed departure from the EU. In afternoon trade, it added 0.5 per cent over the session to $1.3080, having been as low as $1.2949 in early trade. The FTSE 100, which outperformed as the pound fell, lost momentum as the currency bounced higher, trading up 0.2 per cent in afternoon trade.

Chinese stock markets swung back into positive territory after tumbling late last week on global growth worries, with the CSI 300 closing up 2 per cent. Tokyo and Hong Kong posted milder gains.

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