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 /zigman2/quotes/210599654/delayed XX:SXXP +1.65% 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, giving a boost to energy giants. West Texas Intermediate crude was recently 0.4% higher, while Brent gained 0.1%.
Royal Dutch Shell PLC /zigman2/quotes/204253697/delayed UK:RDSB +7.75% /zigman2/quotes/207682964/lastsale RDS.B +4.05% and Repsol SA /zigman2/quotes/202941606/delayed ES:REP +9.75% /zigman2/quotes/201138486/delayed XE:REP +9.54% both put on 0.3%. But Total SA /zigman2/quotes/206172043/delayed FR:FP +5.42% /zigman2/quotes/201824152/lastsale TOT +1.25% finished flat after earlier gains faded.
Italian bank rescue : The Italian government on Sunday reached a deal to close two struggling lenders—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 /zigman2/quotes/206161760/delayed IT:ISP +1.20% for the token price of €1. Intesa will be given €5.2 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 /zigman2/quotes/202470451/delayed IT:BMPS +2.81% . That lender would be able to tap state aid to say in business, a Reuters report said .
Shares of Intesa closed 3.5% higher on Monday after the news. Among other Italian banks, shares of Unione di Banche Italiane SpA /zigman2/quotes/200732627/delayed IT:UBI +0.92% added 2% and UniCredit SpA /zigman2/quotes/200769686/delayed IT:UCG -1.75% picked up 2.2%.
Italy’s FTSE MIB index rallied 0.8% to end at 21,001.95.
Other movers: Shares of Nestlé SA /zigman2/quotes/208115528/delayed CH:NESN -0.35% 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 in the Swiss consumer-products stalwart.
Individual indexes: Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +1.22% climbed 0.3% to finish at 12,770.83, while France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 +0.40% gained 0.6% to 5,295.75.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.1994% 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 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.