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European shares extends gains after liquidity move

Published 09/15/2011, 09:56 AM
Updated 09/15/2011, 10:00 AM
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* FTSEurofirst 300 up 2.4 pct, boosted by currency move

* UBS tumbles 8 percent on news of rogue trade loss

By Brian Gorman

LONDON, Sept 15 (Reuters) - European stocks extended gains on Thursday afternoon after news the U.S. Federal Reserve and other major central banks were to act to address banks' problems securing dollar funding.

The European Central Bank said on Thursday it would, alongside other central banks, reintroduce three-month dollar liquidity operations in the fourth quarter.

Euro zone banks soared 6.7 percent, with BNP Paribas up 12 percent.

Recently, euro zone banks have experienced renewed strains finding dollar funding, with distrust between banks having grown due to the sovereign debt crisis.

"It is certainly a plus, and that is how the markets have taken it, because the French banks have had difficulties accessing dollars," Manoj Ladwa, senior trader at ETX Capital said. "It was getting to 2008 levels again, where money was hard to get hold of. They have made a concerted effort to act."

However, some strategists, while welcoming the move, spoke of its limitations.

Philip Lawlor, investment strategist at Smith & Williamson, said the move was addressing the liquidity issue, "not the core problem which is the solvency (of euro zone peripheral countries) ... It is lubrication of the system which is starting to grind".

On the downside, UBS tumbled 8 percent in big volumes after saying it might post a third-quarter loss due to rogue trades, dealing a blow to the Swiss lender which had been struggling to rebuild its credibility after years of crises.

At 1343 GMT, the FTSEurofirst 300 index of top European shares was up 2.4 percent at 934.92 points.

The Dow Jones , S&P 500 and Nasdaq Composite were up 0.6-0.8 percent in early trading. (Additional reporting by Dominic Lau; Editing by Dan Lalor)

============================================================ For rolling updates on what is moving European shares please click on ============================================================ For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide................... FTSEurofirst 300 index.............................. STOXX Europe index.................................. Top 10 STOXX sectors........................... Top 10 EUROSTOXX sectors...................... Top 10 Eurofirst 300 sectors................... Top 25 European pct gainers....................... Top 25 European pct losers........................

Main stock markets: Dow Jones............... Wall Street report ..... Nikkei 225............. Tokyo report............ FTSE 100............... London report........... Xetra DAX............. CAC-40............... World Indices.....................................<0#.INDEX> Reuters survey of world bourse outlook......... Western European IPO diary......................... European Asset Allocation........................ Reuters News at a Glance: Equities................. Main currency report:.................................

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