European rally continues for a fourth day in a row
City Index June 30, 2011 9:34 PM
<p>European stocks enjoyed their fourth straight session of gains on Thursday as stocks started higher once again, with appetite for risk rejuvenated by the positive […]</p>
European stocks enjoyed their fourth straight session of gains on Thursday as stocks started higher once again, with appetite for risk rejuvenated by the positive austerity proceedings made in Greece.
The FTSE 100, DAX and CAC all traded higher between 0.2% and 0.7% in early trade on Thursday. Index gains were led chiefly by stronger UK banking stocks after Lloyds Banking Group announced plans to save £1.5 billion a year from 2014 in a broad strategy review.
The recent steps taken in Greece to pass through the austerity package are clearly beneficial to the short-term trend for European stock markets and for banks in particular. Should a successful implementation vote proceed through today, it draws a line under the immediate uncertainty over Greece, albeit with a pencil.
Stock markets have seen terrific gains this week and so one cannot discount the potential for a pull back on profit taking.
Lloyds strategy review pleases the market
Lloyds’ broad based strategy review, which included an effort to save £1.5 billion annually from 2014 through 15,000 job cuts and other cost saving measures, has been met with the thumbs up by the market, lifting share prices 7% to the top of the FTSE 100 leader board. The part nationalised bank said that cost savings will allow it to invest an extra £2 billion into its core retail banking operations. Lloyds’ shares have been on a downward slump since late September last year, seeing shares lose near 40% in value to yesterday’s close. The bounce back this morning can be tied to three factors; the positive reaction from the strategy review, higher risk appetite and speculators bargain hunting.
LSE shares rally on bid speculation
Shares in the London Stock Exchange rallied 6% in early trade on Thursday as investors speculated that the firm may become bid pray to Nasdaq OMX, having seen its multi-billion bid for Canada’s TMX fall by the wayside. This would not be the first time Nasdaq may attempt to buy the London Exchange, having failed to do so on two occasions in 2006 and 2007. Investors are now speculating that the firm’s failure to secure a deal with the Canadian Exchange operator at a time of huge competition and subsequent consolidation within the sector makes it vulnerable and that the LSE is now primed for a takeover itself. Much of the buying we have seen today has been from traders speculating exactly that.
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