February 12, 2016 / 5:51 PM / 2 years ago

European shares rally back as German banks rebound

(Updates with closing prices)

* FTSEurofirst 300 index closes up 3 pct

* Deutsche Bank shares surge 11.8 pct on bond buyback

* Commerzbank shares jump 18 pct after results

* But FTSEurofirst still posts 4 pct weekly loss

By Sudip Kar-Gupta

LONDON, Feb 12 (Reuters) - European shares rebounded on Friday as Deutsche Bank and Commerzbank rallied, helping stock markets stage a partial recovery from stinging losses earlier in the week.

The pan-European FTSEurofirst 300 index ended 3 percent higher, rising back up off its lowest level in more than two years.

Fears about how well European banks can cope with slow growth and low interest rates had pushed European banking shares to multi-year lows this week.

But Deutsche Bank surged 11.8 percent on Friday after saying it would buy back more than $5 billion in senior debt, easing concerns about its bonds. Its rival Commerzbank also reported a return to profit in the fourth quarter, and Commerzbank shares jumped 18 percent.

The STOXX 600 Europe Banks index rose 5.6 percent. Germany’s DAX advanced 2.5 percent, although it remains nearly 30 percent below a record high reached in April 2015.

Paras Anand, head of European equities at Fidelity International, said the threat to banks had been exaggerated, as had the general market slump this week.

“We do not have a structurally weak banking sector at the moment,” he said. “The current market moves look overdone and we are, for the first time, drawn to some of the harder hit areas.”

Others remained more cautious. Credit Suisse’s investment committee kept a “neutral” position on global equity markets and said it was still too early to buy back into stocks.

The FTSEurofirst 300 still ended down 4 percent over the course of the week. It is also down 14 percent since the start of 2016, amid worries about a slowdown in China, the world’s second-biggest economy.

Today’s European research round-up

Additional reporting by Alistair Smout; Editing by Jeremy Gaunt, Larry King

Our Standards:The Thomson Reuters Trust Principles.
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