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Europe buys into bank merger
LONDON, England (CNN) -- France's multi-billion euro bank merger sent European markets surging upwards on Monday, while Wall Street also saw a rally in early trading. London's FTSE 100 rose 2.7 percent to end 3,984 and the CAC 40 blue chip index in Paris gained 3.2 percent to finish 3,175.05, while Frankfurt's electronically traded Xetra Dax was up 3.2 percent at 3,175.2 in late trading. The pan-European FTSE Eurotop 300, a broader index of the region's largest stocks, was up 2.8 percent, with the insurance, computer and banking sub-sector leading gains. Banking stocks rose after Credit Agricole agreed to buy rival Credit Lyonnais for 19.5 billion euros ($19.9 billion) in cash and stock. (Full story) Shares of Agricole and Lyonnais were suspended for most of the morning. After trading resumed, Agricole (PACA) fell 1.9 percent to 14.86 euros, while Lyonnais (PCL) was up 2.4 percent to 54 euros. BNP Paribas (PBNP), France's biggest bank which owns more than 16 percent of Lyonnais, was up 7.5 percent to 40.54 euros. Another shareholder Societe Generale (PGLE) climbed 10.5 percent to 57.35 euros. "At first glance, the potential synergies look higher than expected," Andrea Williams, head of equities at Royal London Asset Management, told Reuters. Other banks stocks were lifted by the merger news. The UK's HBOS (HBOS), which issues a trading statement on Tuesday, rose 7 percent to 647 pence and Barclays (BARC) gained 5.9 percent to 397.5 pence in London. Deutsche Bank (FDBK) was up 5.8 percent to 49 euros in late Frankfurt trading. Insurers also benefited from the resurgence in the financial sector, with Allianz (FALZ), Europe's largest insurer, gaining 4.7 percent to end at 107.51 euros in late Frankfurt trading, while the UK's Royal & Sun Alliance (RSA) rose 7.2 percent to 134 pence and Prudential (PRU) added 6.7 percent finishing at 463.83 pence in London. In the telecoms sector, the UK's Cable & Wireless (CW) rose 5.2 percent to 45.75 pence after Britain's Observer newspaper said on Sunday the company faced a £1.5 billion ($2.4 billion) break-up bid from smaller rival Thus (THUS) and private equity firms. Thus gained 5.4 percent to reach 9.45 pence, rebounding from earlier losses in the session. Germany's Bayer (FBAY) was up 3.7 percent to 22.28 euros in late Frankfurt trading. On Monday, the U.S. Food and Drug Administration had approved a new once-a-day version of antibiotic Cipro, its single biggest pharmaceutical product. (Full story) Meanwhile, Germany's RWE (FRWE), the country's second-biggest utility, was down 0.8 percent to 25.59 euros in late trading after it warned net profit would fall "substantially" as it wrote down the value of acquisitions. (Full story) The AEX index in Amsterdam rose 4 percent, Milan's MIB30 index gained 3.2 percent and the SMI in Zurich added 1.9 percent. In the U.S. on Monday, stocks rallied in early trading after a two-week sell-off as investors bought some downbeaten technology, energy and blue chip stocks. (Full report) About 1:25 p.m. ET, the Dow Jones industrial average (up 133.56 to 8567.27, Charts) was up 1.6 percent, while the Nasdaq composite (up 27.17 to 1389.59, Charts) rose 2 percent and the Standard & Poor's 500 index (up 15.42 to 904.90, Charts) gained more than 1.7 percent.
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