European stocks finished higher on Wednesday, with shares of some financial institutions climbing after long-awaited penalties were leveled against U.S. and European banks for manipulating foreign currency markets.
The Stoxx Europe 600 SXXP, +0.41% rose 0.4% to 406.42, helped by gains in the telecom SXFR, +0.36% and financials SXFP, +0.36% sectors.
In the telecoms group, Vodafone PLC VOD, +5.41% VOD, +2.55% jumped 5.4% after Liberty Global PLC LBTYA, +4.82% Chairman John Malone said Vodafone would be a “great fit” for his company, according to a Bloomberg interview.
Separately, Altice SA ATC, +11.59% shares surged 11.6% after the telecoms group said it is buying a controlling stake in U.S. cable company Suddenlink Communications for $9.1 billion.
Banks: Among financials, shares of Barclays PLC, Royal Bank of Scotland Group PLC and UBS Group AG rose after authorities in the U.S. and the U.K. announced fines against the banks—along with others in the U.S.—that resolved charges that the banks rigged the foreign currency market. Read: Here’s how ‘the cartel’ rigged the currency market
Barclays shares BARC, +3.37% BCS, +3.47% jumped 3.4% and RBS RBS, +1.78% rose 1.8%. Shares of Switzerland’s UBS UBS, +3.64% advanced 3%.
Still, some of the banks’s shares registered “substantial gains, [as] it seems investors feared the worst and that cumulative $6 billion slap on the wrists is seen as a light touch,” said Joshua Mahony, market analyst at IG.
Gains for RBS and Barclays helped push the U.K.’s FTSE 100 UKX, +0.17% up 0.2% to 7,007.26.
But London-listed Burberry Group BRBY, -5.03% BURBY, -4.57% shares fell 5% after the luxury-fashion company said it expects 2016 wholesale and retail profit to be £40 million less than it had previously anticipated, reflecting foreign-exchange movements.
Indexes: Germany’s DAX 30 DAX, -0.04% settled about 5 points lower at 11,802.00, while France’s CAC 40 PX1, +0.31% turned up 0.3% to 5,133.30. The indexes on Tuesday surged 2.2% and 2.1%, respectively, after a European Central Bank official said the bank will increase asset purchases this month and in June, to take account of low liquidity in the summer holiday period.
The euro EURUSD, -0.5202% on Wednesday continued to fall in the wake of the ECB’s asset-buying comments, trading at $1.1095, versus $1.1150 on Tuesday. Strength in the dollar after upbeat U.S. economic data Tuesday and persistent worries over Greece’s debt crisis also weighed on the euro.
Investors will now watch what the U.S. Federal Reserve thinks about economic growth and interest-rate prospects when minutes from the central bank’s most recent meeting are released at 7 p.m. London time, or 2 p.m. Eastern time.
Greece: In Athens, the Athex Composite GD, -0.71% fell 0.7% to 840.40. Greece won’t be able to make a payment due June 5 to the International Monetary Fund unless the cash-strapped country strikes an agreement with its creditors, Reuters reported Wednesday, citing the Greek government’s parliamentary speaker.
Meanwhile, Moody’s said the Greek banking system is grappling with acute deterioration in funding and liquidity. “These pressures are unlikely to ease over the next 12-18 months and there is a high likelihood of an imposition of capital controls and a deposit freeze,” said Moody’s in a statement.
Source: MarketWatch
