By Sudip Kar-Gupta
LONDON (Reuters) - Greek banking shares rebounded on Thursday to recover some ground after hitting record lows in the previous session, with a top Wall Street bank saying the sector offered long-term value for investors.
Greek financial markets fell after the new leftist Prime Minister Alexis Tsipras threw down a challenge to international creditors by halting privatisation plans agreed under the country's bailout deal.
The Athens Stock Exchange FTSE Banks Index (FTATBNK), which had slumped 27.7 percent on Wednesday to hit all-time lows, rose 6 percent, with investors encouraged by a note from U.S. bank Morgan Stanley.
National Bank of Greece (AT:NBGr) climbed 6 percent higher while Alpha Bank (AT:ACBr) advanced 11.8 percent.
"With Greek bank stocks down up to 30 percent yesterday and down 40 percent in the last week, we re-iterate the long-term value we see in Greek bank shares," Morgan Stanley wrote.
Athens' broader ATG (ATG) benchmark equity index also rose 2 percent, clawing back some ground after falling 9.2 percent on Wednesday.
Signs that depositors are withdrawing money from Greek banks, four of which last week applied for the right to emergency funding, have hit financial stocks.
A euro zone official said earlier this month that the outflow of Greek bank deposits was about 60 million euros (45 million pounds) a day.
Nevertheless, some traders expect Greece to reach a compromise with its international creditors.
