French President Nicolas Sarkozy and German Chancellor Angela Merkel said Sunday in Berlin that they will unveil a package of measures to respond to the crisis by the end of the month, but offered few details.
"In fairness, markets found Sarkozy and Merkel to be a bit more on the same page than they were in the past," said John Ventre, fund manager at Skandia Investment Group.
"Saying 'we agree we need a coordinated plan to recapitalize banks and will be agreeing on this' is a bit more than they've said in the past."
"Good news is good news, bad news is bad news, but the absence of news probably still leads to markets trending higher," said Ventre. "The uptrend is in place in the short term. There's only so long you can ignore cheap stocks."
Markets shrugged off downgrades to Spain and Italy's debt on Friday by Fitch Ratings. Investors also digested reports that talks between Greece and international creditors could conclude later Monday.
Italian lender UniCredit SpA rallied 12.2% in Milan. A UniCredit executive told Dow Jones Newswires that the bank's exposure to Hungary is very small.
Greek bank shares tumbled Monday and were among the Stoxx 600 index's top decliners, as the Bank of Greece announced it had activated the Financial Stability Fund to save small lender Proton Bank, effectively nationalizing it.
Piraeus Bank SA plunged 16.8%, Alpha Bank AE sank 12% and National Bank of Greece SA (NYSE:NBG) slid nearly 13%.
The ASE Composite index in Athens lost 0.6%.
In France, the newspaper Le Journal du Dimanche reportedly said BNP Paribas SA and Societe Generale SA would seek EUR7 billion ($9.5 billion) and EUR3 billion to EUR4 billion, respectively, to shore up capital. In a statement, Societe Generale denied the report and reiterated plans for a Basel III core tier one ratio "well above 9% by the end of 2013 without a capital increase." BNP Paribas also denied the report.
Shares of BNP Paribas erased early weakness to rise 3%, while Societe Generale gained 1.2% and shares of Credit Agricole SA rose 0.4%.
In Vienna, shares of Erste Group Bank AG sank more than 9% after the Austrian lender said it will report a EUR920 million to EUR970 million loss due to writedowns in Hungary and Romania. The group has also cut its exposure to Greece, Portugal, Spain, Ireland and Italy to EUR600 million as of September 30, from EUR1.9 billion at the end of 2010.
Shares of another Austrian bank, Raiffeisen Bank International AG, fell nearly 5%. The bank said in a statement that it has low exposure to peripheral euro-zone countries, goodwill of EUR3.5 million for Hungary and no goodwill booked for Romania.
Shares of KBC Group NV initially stumbled after the firm said it would sell its Luxembourg-based private banking unit BL European Private Bankers to Precision Capital for EUR1.05 billion. KBC said the sale will lower its third-quarter earnings by EUR400 million, while releasing EUR700 million in capital. KBC shares ended 0.8% higher.
And Dexia SA said Monday its board approved a rescue deal that includes the sale of its Belgian banking division to the Belgian state for EUR4 billion and a 10-year funding guarantee up to a maximum of EUR90 billion. Shares fell 4.7% in Belgium.
In Amsterdam, bakery products supplier CSM NV was another big decliner on the Stoxx 600, sinking almost 20% after it warned it would miss earnings expectations in the second half of the year.
The German DAX 30 index rose 3% to end at 5,847.29, with shares of sportswear maker Adidas AG up 3.7% after the company said it expects group sales in Russia and the Commonwealth of Independent States to exceed EUR1 billion by 2013 and grow in double digits annually until 2015.
Retailer Metro AG dropped 3.2% after Chief Executive Eckhard Cordes said he would not renew his contract which ends in 2012.
And shares of Swedish truck maker Scania AB fell 0.9% after it said it will lower the production rates at its European units starting in November, citing a deceleration in demand in various markets.
The French CAC 40 index rose 2.1% to settle at 3,161.47, with heavyweight oil group Total SA gaining 1.6% as oil prices climbed, while Vallourec SA rallied 8.3%. Insurer AXA SA rose 4.5%.
The U.K.'s FTSE 100 index rose 1.8% to finish at 5,399.00, buoyed by resource stocks as commodity prices rose. Shares of BP PLC gained 2.9%. Among the mining heavyweights, shares of Rio Tinto PLC rose 2.6% and Anglo American PLC gained 3.7%, while BHP Billiton PLC added 2.8%. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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