US and European stock markets rose but bank shares wavered in volatile trading on Monday after financial authorities scrambled to ease fears of a crisis in the banking system.
UBS agreed to take over Credit Suisse for $3 billion Swiss francs in a government-brokered deal on Sunday following days of market upheaval over the health of the banking sector.
"While markets are recovering today, I'm not sure anyone is confident that all flames have been extinguished," Erlam said, adding, however, that the speedy and decisive reaction of authorities will provide"some reassurances amid all of the uncertainty". The buyout"may have some effect in reducing anxiety levels in financial markets, but it may only be short-lived, with traders left wondering which bank could be next to hit the headlines for all the wrong reasons," said Tim Waterer, analyst at Kohle Capital Markets.
European Central Bank president Cristine Lagarde said the capital buffers and liquidity of eurozone banks were"way in excess" of what is required while their exposure to Credit Suisse's AT1 bonds was"very limited". British banks Standard Chartered and Barclays fell but French giant BNP Paribas and Germany's Commerzbank were up.
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