European, Latin shares advance
European stock markets ended broadly higher Monday, continuing their back-and-forth pattern of recent weeks, as depressed banking issues attracted buyers.
Mexican and Brazilian shares also rallied while Asian markets were mixed.
In Europe, Germany’s DAX share index rose 2%, France’s CAC gained 1.9% and Britain’s FTSE-100 jumped 2.8%.
With U.S. markets closed for the Presidents Day holiday, global investors focused on Britain’s surprise decision over the weekend to temporarily nationalize troubled bank Northern Rock. The move helped calm some worries about the financial system, analysts said.
What’s more, bargain-hunters snapped up shares of British banking giants Barclays and Lloyds TSB ahead of their earnings reports today and Friday, respectively.
London’s Sunday Times newspaper reported that Barclays and Lloyds might raise dividend payouts to shareholders as a sign of confidence.
Barclays shares surged 7.6% in London; Lloyds jumped 7.3%.
Bank stocks worldwide have been hammered this year on worries about the extent of the losses they face because of investments in U.S. mortgage-backed securities.
Swiss banking leader UBS plunged 8.3% on Thursday after the company reported an $11.3-billion fourth-quarter loss, largely because of a write-down on U.S. mortgage bonds.
On Monday UBS edged up 0.3% in Swiss trading.
French bank Societe Generale, slammed last month after the company said it lost billions at the hands of a rogue trader, will report earnings Thursday. Its stock added 0.6% on Monday.
European markets shook off news of a major investigation of possible tax evasion involving wealthy Germans doing business with banks in the principality of Liechtenstein.
Police raided homes and offices across Germany on Monday, and shares of Liechtenstein’s banks plummeted on fears the affair could hurt business.
The tax-evasion scandal came to light last week when police raided the home of Deutsche Post Chief Executive Klaus Zumwinkel. The company subsequently announced his resignation.
European stocks generally have fared worse than U.S. shares this year. The German market is down 13.6% since Dec. 31 compared with a drop of 8.1% in the U.S. Standard & Poor’s 500 index. The French market is down 13.4%.
In Asia, Japanese stocks inched higher Monday but Hong Kong shares sank amid concerns about possible further credit-tightening measures in mainland China.
Japan’s Nikkei 225 index added 0.1% for the day. It is down 10.9% this year.
Hong Kong’s Hang Seng index slid 1.6% on Monday and is down 14.6% for the year.
In Latin America, Mexican and Brazilian shares continued to recover from heavy losses in January. The major indexes in those countries now are only modestly in the red, year to date, despite investors’ concerns that a weak U.S. economy could hurt its southern neighbors.
Mexico’s IPC index surged 1.5% on Monday, cutting its 2008 loss to 1.2%. In Brazil the Bovespa index rallied 2.5%. It is off 1.7% this year.
