European shares surge after Cyprus clinches last-minute deal

Mon Mar 25, 2013 4:53am EDT

* FTSEurofirst 300 up 0.7 pct, Euro STOXX 50 up 1.1 pct to
2,711.52
    * Euro STOXX 50 to reach 2,750 by weekend - Hobart
    * Euro zone banks rise 1.1 pct

    By Francesco Canepa
    LONDON, March 25 (Reuters) - European shares rallied at the
open on Monday, with a benchmark regional index recouping most
of last week's losses, after Cyprus secured a bailout deal to
avert a collapse in its banking system.
    Cyprus clinched a last-minute deal with international
lenders in the early hours of Monday morning on a rescue,
without which the Mediterranean island would have faced
financial meltdown and potentially been pushed out of the euro
zone. 
    Euro zone banks, which own a large part of the
region's sovereign debt and depend on the wholesale funding
market, jumped 1.1 percent.    
    Joost van Leenders, investment specialist for allocation &
strategy at BNP Paribas Investment Partners, said the Cypriot
deal confirmed the European authorities' will to save the euro,
although the limited size of the market's losses last week
suggested this had been expected.
    "Markets have been quite complacent about Cyprus," van
Leenders said. "We haven't seen a really big selloff, so I don't
think we are going to get a big relief rally."    
    The euro zone Euro STOXX 50 index was up 1.1
percent at 2,710.33 points by 0833 GMT, recouping most of its
1.6 percent drop last week.
    Justin Haque, a pan-European broker at Hobart Capital
Markets, said the rally was likely to be extended over the rest
of this week as fund managers squared positions into the end of
the first quarter, a process known as "window dressing". 
    "We'll probably see 2,750 by the end of the week easily,"
Haque said, referring to the index's most recent high. 
     The pan-European FTSEurofirst 300 index rose 0.7
percent to 1,197.68 points.
    Finnish engineering company Metso Oyj topped the
index, jumping nearly 9 percent, after the group said it is
studying the possible spin-off of its pulp, paper and power unit
as it aims to boost growth by separating its businesses.
 
    Turnover in the shares was already 130 percent of its
full-day average for the past 90 days.