November 13, 2012 / 4:40 PM / 5 years ago

Financials lift European shares on Spain bailout talk

LONDON, Nov 13 (Reuters) - European shares rebounded late on Tuesday in tandem with gains on Wall Street as a fresh round of trader speculation that Spain may be close to asking for a sovereign bailout fuelled appetite for financials.

The FTSEurofirst 300 provisionally closed up 5.39 points, or 0.5 percent, at 1,099.74, bouncing off a low of 1,086.37. Spain’s IBEX index rallied 1.7 percent, meanwhile, while its bond yields eased slightly.

“There is talk doing the rounds of a Spain bailout fuelling the markets, but we have been here before only for nothing to come to fruition and I am very sceptical,” one London-based trader said.

Spain’s dilemna over whether to become the fourth euro zone member to take a bailout remains acute as it would mean more austerity and hardship for its already embattled citizens.

As a result of the talk, banks and insurers - sectors with the most direct exposure to the euro zone debt crisis due to their holdings of sovereign debt - rose 1.7 percent and 0.9 percent higher, respectively.

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