— ASE up 4.4%, Cyprus CSE up 5.3% —
Greek bank shares jumped more than 8% on Tuesday as bond yield spreads tightened below 800 basis points and traders anticipated positive news from an upcoming EU summit on the debt crisis.
"Spreads are down, below 800 bps, ahead of an EU summit later this week where traders expect positive developments on the debt crisis. There is also short-covering," said investment adviser Theodore Mouratidis at Fortius Securities.
The bourse's banking index hit a three-month intraday high, outperforming the broader Greek market which was gaining 4.3%.
The premium investors' demand to hold lower-rated euro zone government bonds rather than German debt fell on Tuesday, after the release of strong economic data and details of Spanish savings banks exposure.
The yield on 10-year Greek government paper over bunds tightened to 796 basis points from 820 earlier in the day.
"Bank shares had been pounded as investors discounted restructuring with haircuts," another trader said.
Adding to improved sentiment, Credit Suisse upgraded Greek equities to "benchmark" from "underweight", citing cheap equity valuations and a range of supportive macroeconomic factors. This pushed the ASE General Index up 4.41% to 1,663.60, near its levels last seen in September, with the daily trade volume reaching 238 mln euros, double the daily average of the past month. The large-cap FTSE/ASE 20 Index also saw recent record gains, rising 5.35% to 780.14.
PIRAEUS UP ON RIGHTS
Piraeus Bank said on Tuesday its 807 million euro rights issue will boost its capital ratios by 200 basis points. The bank's cash call, undertaken to fortify its balance sheet and reduce dependence on the European Central Bank, was oversubscribed 1.3 times.
"Upon completion of the capital increase, total equity capital of Piraeus Bank group will amount to 4.1 bln euros, strengthening the capital adequacy ratios by 200 basis points," the lender said in a statement.
It said the Tier 1 ratio would rise to 10.8% and total capital adequacy to 11.7%.
The bank said 93,690 shareholders took part in the cash call, with subscriptions totalling 1.044 bln euros, of which 784 mln corresponded to the exercise of pre-emption rights and 260 mln to oversubscription requests.
Piraeus shares gained 6.02% on Tuesday to settle at 1.76 euros, underperforming the Athens bourse's banking index. Other gainers of the day included Eurobank (+10.75%), Alpha Bank (+10.75%), Bank of Cyprus (+9.39%), NBG Ethniki (+7.65%) and Post (+7.26%).
In Cyprus, the CSE General index gained 5.33% to 1244.55 and saw a healthy trading volume that reached just shy of 15 mln euros, with the Banking stocks accounting for half the day’s trades and driving the market on a 5.53% gain.
Bank of Cyprus rose 6.65% to 3.37 euros (ASE: 3.38, +9.39%), ending a recent streak of ups and downs trading in the range of 2.30 to 3.30 in the past few weeks.
However, Marfin Popular Bank’s volume shot up to 4.6 mln euros, accounting for nearly a third of the day’s trade, pushing the stock up 2.8% to 1.10 euros (ASE: 1.12, +3.7%), while the bank’s rights leapt 50% to close at 3c. Hellenic Bank also caught some of the positive trend, with its stock rising 5.9% to 90c.
