European stocks erased sharp early losses and closed higher on Monday, with bank stocks rebounding from a three-month low as a result of UBS’ takeover of Credit Suisse.
The STC 600 closed up 1%, following falling nearly 2% earlier in the day.
Banking stocks rose 1.3 percent following the Swiss government-backed takeover of Credit Suisse by UBS Group in what appeared to be a measure to put an end to a source of anxiety in the global banking sector.
UBS shares rose 1.3%, following falling sharply 16% in volatile trading during the session.
Investors are still nervous regarding news that a $17 billion face value of additional Tier 1 bonds from Credit Suisse will be valued at zero, angering some debt holders who thought they would be better protected than shareholders.
mining gains
Mining stocks were the biggest gainers among sectors today, up 2.8%, tracking higher copper prices on the back of a weaker dollar and signs of improving demand from China, a major consumer.
Meanwhile, European Central Bank President Christine Lagarde said that financial market turmoil will not stand in the way of the ECB’s battle with inflation, as the central bank has separate tools to fight both issues.
The world’s eyes are on the Federal Reserve’s monetary policy decision on Wednesday, and expectations are largely divided between whether the central bank will raise interest rates by 25 basis points or leave them unchanged.
