European stock indexes rose in early trading on Friday, extending a recovery from the previous day as fears about a banking crisis eased slightly after top US authorities and banks took action to rescue First Republic Bank.
In a crisis beginning with the collapse of US-based Silicon Valley Bank last Friday, risk appetite plunged earlier in the week as investors lost confidence in regional banks in the US and Credit Suisse in Europe. The tumultuous week saw bond yields plunge as investors lowered their expectations for future rate rises.
Global markets stabilized somewhat on Thursday, helped by Credit Suisse saying it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank and, later in the day, a group of major banks injecting $30 billion in deposits into First Republic Bank, a mid-sized US lender.
Still, analysts say the worry about a possible banking crisis is far from over.
Credit Suisse's chief executive said on Friday the bank was working hard to stem customers outflows, although this could take time.
At 0944 GMT, the MSCI world equity index, which tracks shares in 47 countries, was up 0.4% on the day.
Europe's STOXX 600 was up 0.7%, but still down 1.9% on the week overall (.STOXX).
London's FTSE 100 was up 0.9% (.FTSE).
The US 2-year Treasury yield, which is the most sensitive to shifts in interest rate expectations, was up 2 basis points on the day at 4.1384% - still closer to Wednesday's six-month low of 3.72% than the peak of 5.084% it hit the previous week, which had been its highest since 2007.
The European Central Bank raised rates by 50 bps on Thursday, sticking to its pledge to fight inflation even as some investors called for a pause in the rate-hiking cycle until the banking turmoil eases.
The central bank's supervisory board met on Friday to discuss stress and vulnerabilities in the euro zone banking sector.
Reuters