European shares bounce, led by banks

European shares rose in early trade today, led by banks after European finance ministers agreed to safeguard the region’s lenders, and as investors snapped up bargains following three days of losses.

By The Newsroom

Published 5th Oct 2011, 09:47 BST

The STOXX Europe 600 Banking Index rose 2.8 per cent.

The FTSEurofirst 300 index of top European shares was up 1.8 per cent at 903.73 points, after falling 2.7 per cent yesterday.

“This rally may not last. Lots of stocks look cheap. We need a strategy for resolving the sovereign debt crisis in the euro zone We need a strategy to get on top of the US debt problem,” Jeremy Batstone-Carr, strategist at Charles Stanley, said.

“Until we get answers, the market can stay cheap. Economic authorities in Europe have continually failed to come up with a robust policy. Now they’re in the last chance saloon. “

European finance ministers agreed yesterday to safeguard their banks as doubts grew about whether a planned second bailout package for debt-laden Greece would go ahead. Hours earlier French-Belgian municipal lender Dexia became the first European bank to have to be bailed out due to the euro zone’s sovereign debt crisis.

Greece