EUROPE MARKETS: European Stocks Finish Higher, Helped By Italian Banks, Nestlé

By Sara Sjolin and Victor Reklaitis, MarketWatch

Oil rally boosts sentiment, too

European stocks finished with gains on Monday, helped by Italian banks after that country's government stepped in to shut down two failed lenders, and as Nestlé SA rallied after a hedge fund snapped up a big stake in the consumer-products giant.

The Stoxx Europe 600 index climbed 0.4% to end at 389.05.

"Italy has just shown the age of bailouts is not over. That significantly reduces the risk of an investment in a bank going sour," said Jasper Lawler, senior market analyst at London Capital Group, in a note.

Last week, stocks across Europe were put under pressure by a renewed selloff in oil prices, with crude slumping to a 10-month low on Wednesday. However, oil prices rose on Monday (http://www.marketwatch.com/story/oil-prices-up-1-rising-for-third-session-in-a-row-2017-06-26), giving a boost to energy giants. West Texas Intermediate crude was recently 0.4% higher, while Brent gained 0.1%.

Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) and Repsol SA (REPYY) both put on 0.3%. But Total SA (TOT)(TOT) finished flat after earlier gains faded.

Italian bank rescue: The Italian government on Sunday reached a deal to close two struggling lenders (http://www.marketwatch.com/story/italy-may-spend-billions-to-shut-two-failing-banks-2017-06-25)--Veneto Banca and Banca Popolare di Vicenza--after the European Central Bank on Friday evening declared that the pair was set to fail. The bill to assume responsibility for liquidating the banks' bad loans and other items could cost the government as much as 17 billion euros ($19 billion).

The "good" assets of the banks will be transferred to Intesa Sanpaolo SA (ISP.MI) for the token price of EUR1. Intesa will be given EUR5.2 billion to cover expenses related to the transaction, including money to cover job cuts. Meanwhile, officials said a rescue deal had been completed for another Italian bank, Monte dei Paschi di Siena (BMPS.MI). That lender would be able to tap state aid to say in business, a Reuters report said (http://www.reuters.com/article/us-italy-banks-monte-dei-paschi-idUSKBN19H18I).

Shares of Intesa closed 3.5% higher on Monday after the news. Among other Italian banks, shares of Unione di Banche Italiane SpA (UBI.MI) added 2% and UniCredit SpA (UCG.MI) picked up 2.2%.

Italy's FTSE MIB index rallied 0.8% to end at 21,001.95.

Other movers: Shares of Nestlé SA (NESN.EB) jumped 4.3%, nabbing an all-time closing high. The rally came after news that billionaire activist investor Daniel Loeb's Third Point LLC hedge fund has taken a $3.5 billion stake (http://www.marketwatch.com/story/daniel-loebs-hedge-fund-takes-35b-nestle-stake-2017-06-25) in the Swiss consumer-products stalwart.

Individual indexes: Germany's DAX 30 index climbed 0.3% to finish at 12,770.83, while France's CAC 40 index gained 0.6% to 5,295.75.

The U.K.'s FTSE 100 index moved 0.3% higher (http://www.marketwatch.com/story/ftse-100-breaks-4-day-losing-streak-as-oil-rallies-2017-06-26) to end at 7,446.80, boosted by the benchmark's banks and oil companies.

The euro changed hands at $1.1197, little changed compared with $1.1193 late Friday in New York.

Economic news and politics: German business sentiment hit a record in June, with the Ifo business climate index unexpectedly rising to 115.1 points (http://www.marketwatch.com/story/german-business-sentiment-hits-record-in-june-2017-06-26) from 114.6 points in May.

In the U.K., the Democratic Unionist Party was said to have made a deal with the Conservative Party to support Prime Minister Theresa May's minority government (http://www.marketwatch.com/story/uks-dup-reaches-deal-to-support-minority-tory-government-reports-2017-06-26).

Read:Brexit one year later: 5 ways the U.K. could now leave the EU (http://www.marketwatch.com/story/brexit-one-year-after-vote-here-are-the-5-possible-scenarios-for-the-eu-divorce-2017-06-20)

(END) Dow Jones Newswires

June 26, 2017 12:12 ET (16:12 GMT)

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