Shares in Banca Monte dei Paschi have risen this morning as a state rescue for the beleaguered bank looks increasingly likely. Stock benchmarks in London seem to be in holiday mode already with the trading range and volumes both substantially lower than average and the FTSE 100 pretty much flat on the day. The pound is seeing some bigger moves though, gaining against the commodity currencies of Canada and Australia but falling elsewhere.
Stock recovers after early selling
Following yesterday’s 12% decline, shares in Banca Monte dei Paschi moved lower once more from the open before turning positive on the day, and currently trading higher by a little over 2%. Fading hopes for a private rescue bid was the likely cause of the selling but the bounce comes as a state bailout would at least allow the lender to continue as a going concern. The deadline for retail investors was passed on Wednesday and barring a late surprise this afternoon, the 1pm GMT cut off for institutional investors also looks unlikely to see a buyer step in. The Italian parliament has authorised the government to use more than $20bn to intervene, but the rescue fund could be used to prop up other banks as well. New Italian prime minister, Paolo Gentiloni has vowed not to let the bank fail as the possible contagion effect presents a fear that its collapse could topple the rest of the country’s heavily indebted banking sector.
Mining stocks weigh on the FTSE
The worst performing stocks on the leading UK index this morning come from the mining sector with Glencore (LON:GLEN), Rio Tinto (LON:RIO) and BHP Billiton (LON:BLT) all seeing some weakness. All three have enjoyed stellar rises in 2016 and it is quite possible that some investors are looking to book profits and take some money off the table before year end. Barclays (LON:BARC) and Standard Chartered (LON:STAN) are also in the red at the time of writing as financials are also experiencing some downside. Intertek Group (LON:ITRK) is leading a list of the gainers and up by almost 2.5% on the day. Whitbread (LON:WTB), Johnson Matthey (LON:JMAT) and Hikma Pharmaceuticals (LON:HIK) are also all rising by more than 1%.