Tuesday May 5, 08:31 AM
Rising banks lift European stocks early
LONDON, May 5 (Reuters) - European shares opened higher in early trade on Tuesday with the banking sector one of the biggest risers as investors awaited the results of the U.S. government's 'stress tests' on banks due later this week.
By 0708 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.6 percent at 847.96 points.
'The general tone is positive so the bulls will have it today but the bears are still lurking around the corner. ... Everything is going to be dominated by what happens to the bank stress test on Thursday,' said Justin Urquhart Stewart, director at Seven Investment Management.
'A lot of the stress test is designed for public consumption to try and give people confidence that the banks are going to be viable. The question is which of them is going to need capital to be able to survive,' he said.
Banks were among the biggest movers. Swiss bank UBS (Virt-X: UBSN.VX - news) was up 2.8 percent after the group confirmed it had posted a net loss of 2 billion Swiss francs ($1.76 billion) and said it remained cautious.
HSBC (LSE: HSBA.L - news) , Standard Chartered (LSE: STAN.L - news) and Societe Generale (Paris: FR0000130809 - news) gained 2.5-5.2 percent.
U.S. regulators have been poring over the holdings of the 19 largest U.S. banks to determine if they have enough capital to withstand further shocks.
Banks are expected to be briefed on Tuesday on the final results, which will be published on Thursday.
A source familiar with official talks told Reuters about 10 would be told they need to increase the size of their capital cushions.
Miners were also higher. Xstrata (LSE: XTA.L - news) rose 8.7 percent after it posted a 7.7 percent rise in first-quarter production of coal, its most profitable commodity, but output of many other products declined amid weak demand and low prices.
(Reporting by Joanne Frearson) Keywords: MARKETS EUROPE STOCKS/RISE (Xetra: 915677 - news)
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