High-beta banks lead European stocks higher
08/02/2012 at 10:29
* FTSE Eurofirst up 0.7 percent
* Banks lead rally, results help
* Investors position for Greek debt solution
By Toni Vorobyova
LONDON, Feb 8 Reuters - Banks led European shares higher on Wednesday, with investors positioning for a favourable resolution of the Greek sovereign debt crisis and cheering a string of upbeat corporate results, as they bought into high-beta or volatile stocks.
Greek parties will try again on Wednesday to agree a reform deal necessary to secure a new international rescue package to avoid a chaotic default.
At 0910 GMT, the FTSEurofirst 300 index of top European shares was up 0.7 percent at 1,079.90 points, having earlier hit a fresh six-month intra-day high of 1,079.93.
The Athens bourse added 1.8 percent . Portuguese shares - which were hammered heavily in January on concerns that Lisbon may also need a fresh bailout - rose 2.2 percent
, on track for their best weekly performance in two months.
The DAX was up 1 percent, the French CAC 40 added 0.8 percent and Britain's FTSE 100 was 0.4 percent higher.
"The markets are moving on the idea that no matter how long it takes, something must be settled and resolved satisfactorily on Greece," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities.
"Some of these markets are beginning to look a little bit technically overbought ... If the news is as the markets would like to see it, we might see a bit of selling, we could see some consolidation. The markets have moved a lot in a very short space of time."
Having risen 7.6 percent since the start of the year, the FTSE Eurofirst has reached 69 on the 14-day Relative Strength Index, a technical indicator which suggests an asset is overbought once it rises above 70.
The banking sector , which has added 20 percent so far in 2012 thanks to better risk appetite and central bank liquidity injections, has been in overbought territory for the past week according to the RSI.
On Wednesday, it was up 1.8 percent. Shares in Commerzbank
added 8.5 percent, breaking above the 200-day moving average and triggering some technical buying, after its Polish unit BRE Bank reported a better-than-expected 46 percent rise in fourth quarter earnings.
"They reported good numbers," said Thomas Stoegner, banking analyst at Macquarie.
"Otherwise it's the Greek sovereign crisis - if they find a solution, it is positive for banks, of course ... At the moment it is totally risk-on, so investors buy high beta. Some of the highest beta are Commerzbank, Raiffeisen ."
While some investors are piling in to risk, others are seeking steady income from dividends as an alternative to ultra-low government bonds yields.
Plans to pay out dividends boosted shares in Irish packaging group Smurfit Kappa , Norwegian phone operator Telenor
and French real estate group Klepierre .
No major U.S. or European data was scheduled, keeping investor attention firmly on Greece and corporate reports.
Reporting By Toni Vorobyova; Editing by Helen Massy-Bereseford
antonina.vorobyova@thomsonreuters.com+44 207 542 9828Reuters Messaging: antonina.vorobyova@thomsonreuters.com
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