EUROPE MARKETS: European Stocks End At 2-week High As Banks Bounce After BOJ


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By Carla Mozee, MarketWatch

Stocks across Europe bounded higher Wednesday, bolstered by rises in financial shares after the Bank of Japan tweaked monetary policy in a way that should help yield-dependent businesses.

The Stoxx Europe 600 gained 0.4% to 342.46, closing at its highest level in nearly two weeks.

The bank is targeting a steeper yield curve, meaning yields on longer-dated bonds, such as the 10-year, are higher than shorter-dated bonds.

Read:Here's why the Bank of Japan is putting its focus on the yield curve ( the-bank-of-japan-is-putting-its-focus-on-the-yield-curve-2016-09-21)

"Anchoring the 10-year yield at 0% has two effects. First off, they're guaranteeing that if the banks (or anyone else) buy 10-year bonds at this level, they won't lose money," said Marshall Gittler, head of investment research at FXPrimus, in a note.

"Secondly, by preventing 10-year yields from going below zero, the yields of longer-term bonds should stay positive. That will help the profitability of insurance companies and pension funds, which need longer-term assets to match their long-term liabilities," he said.

The Stoxx Europe 600 Bank Index popped up 2% for its largest gain in nearly a month. Spain's Banco Popular Español (POP.MC) jumped 9.1%, France's Société Générale SA (GLE.FR) bulked up 1.9%, and Germany's Commerzbank AG (CBK.XE) rose 3.3%. Italy's UniCredit SpA (UCG.MI) added 3.6%.

Among insurers, AXA SA (AXAHY) moved up 2.7% and Allianz SE (ALV.XE) put on 1.2%.

The Bank of Japan's move swings the spotlight on the European Central Bank, which this month left monetary policy unchanged.


Fed ahead: Investors have another key central bank meeting to grapple with later Wednesday. The U.S.Federal Reserve's decision on whether to raise interest rates is due at 7 p.m.London time, or 2 p.m. Eastern Time.

Read:Here's how the Fed's doves and hawks will use the new inflation and sales data ( fed-hawks-will-leverage-inflation-data-to-get-their-way-doves-will-counter-with-retail-sales-2016-09-16)

Indexes: Italy's FTSE MIB leapt 0.9% to 16,349.82. In Frankfurt, the DAX 30 rose 0.4% to 10,436.49.

Spain's IBEX 35 climbed 0.8% to 8,758.50. Banco Santander SA (SAN) (SAN) was up 3.2% following reports that the Spanish lender walked away from talks to buy Royal Bank of Scotland PLC's (RBS.LN) (RBS.LN) Williams & Glyn branches. RBS shares fell 0.3%.

The U.K.'sFTSE 100 advanced 0.1% to 6,834.77. In Paris, the CAC 40 closed 0.5% higher at 4,409.55.

Euro: The euro was trading at $1.1167, close to late Tuesday's level around $1.1158. Against the yen, the shared currency was buying Yen112.39, compared with Yen113.43 late Tuesday.

Read:Global yields rise after BOJ surprises with 10-year rate target ( rise-after-boj-surprises-with-10-year-rate-target-2016-09-21)

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This article appears in: US Markets , Economy , Commodities
Referenced Symbols: ALV , AZSEY , BSAN33 , CBK , CRZBY

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