A smoothly executed rescue of Spain’s struggling Banco Popular lifted European bank stocks on Wednesday, while U.S. stock and bond investors showed caution ahead of Thursday’s British vote, an ECB meeting and testimony by ex-FBI chief James Comey.
Oil prices dipped on renewed concerns about the efficacy of OPEC-led production cuts and a Mideast political rift, then extended losses after EIA data showed a surprise build in U.S. crude inventories.
U.S. crude CLcv1 fell 4.21 percent to $46.16 per barrel and Brent LCOcv1 was last at $48.37, down 3.49 percent on the day.
In Spain, the absorption of Popular by the country’s biggest bank Santander (SAN.MC) for a nominal 1 euro was the first use of a regime to deal with failing banks adopted after the 2008 financial crisis, and made barely a ripple in Europe’s stock and debt markets.
The success of the process pushed shares in many major banks higher, supporting a recovery for Madrid’s stock market .IBEX and fending off this week’s broadly weaker mood.
European banking shares .SX7E rose 1.38 percent.
“The market has taken Banco Popular as positive news because essentially this is not a bankruptcy but a sort of rescue, even if its subordinated bondholders have been sharply hit,” said Giuseppe Sersale, a fund manager at Anthilia Capital in Milan.
The bank rescue does, however, underline the risks to growth, banking and government debt burdens that are likely to delay a major switch in language and policy direction by the European Central Bank at its meeting on Thursday.
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