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Italy bank deal lifts Europe shares, dollar on back foot

FILE PHOTO: A woman walks past the London Stock Exchange building in the City of London, Britain, January 16 , 2017. REUTERS/Toby Melville/File Photo

 

By Nigel Stephenson | LONDON

Shares rose in Europe on Monday, with Italian banks gaining after a deal to wind up two failed regional lenders, while the dollar and U.S. bond yields held close to recent lows as subdued inflation raised questions over the outlook for monetary policy.

The-pan-European STOXX 600 share index rose 0.6 percent, led higher by banks .SX7P, after the agreement under which Italy’s largest retail bank, Intesa Sanpaolo will take on the remaining good assets of collapsed Popolare di Vicenza and Veneto Banca.

Intesa shares (ISP.MI) rose 3.2 percent. The Italian government will pay it 5.2 billion euros and give it guarantees of up to a further 12 billion euros.

Investors have long viewed the Italian banking sector as a major cause of fragility within the euro zone.

In index of Italian banks .FTIT8000 was up 2 percent and the broader Milan market .FTMIB rose 1.1 percent.

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