European stocks logged modest gains Wednesday, with bank shares advancing in the wake of Spain’s Banco Santander SA’s deal to buy struggling Banco Popular Español SA.
The Stoxx Europe 600 index SXXP, +0.53% ) pushed up 0.2% to 389.98 after falling when the session opened. The benchmark was carried higher as financial, utility, oil and gas and consumer services shares rose. But health care and basic material shares were losing the most.
Spanish banks: Wednesday’s session saw the Stoxx Europe 600 Bank index FX7, +1.13% rise 1.1%. Shares of its second-largest component, Santander SAN, -2.07% SAN, -3.05% , pared their loss to 0.7% after the lender acquired Banco Popular POP, -6.21% for the notional amount of 1 euro ($1.13). The move came after the European Central Bank determined Popular’s was “failing or likely to fail.”
Santander plans to raise €7 billion in a rights issue to fund a cleanup of Banco Popular’s balance sheet. Spain’s banking sector has been on stronger footing, but Popular has been a weak link.
Stock movers: Shares of RWE AG RWE, +4.69% rose 5.1% and E.On SE EOAN, +6.68% gained 5.5%, with the German utility companies rising after Germany’s top court on Wednesday ruled that a nuclear fuel tax that was in place between 2011 and 2016 was illegal.
Covestro AG 1COV, -4.24% dropped 3.8% after Bayer AG BAYN, -0.83% further reduced its holding in Covestro as it prepares for its planned tie-up with Monsanto Co. MON, +0.02% Covestro was Bayer’s high-tech polymers business that was floated in 2015.
Individual indexes: The Stoxx Europe 600 on Tuesday fell 0.7%, ending at its lowest in nearly three weeks.
“On Thursday, markets will face the ECB monetary policy meeting, the testimony of former FBI James Comey and the U.K. General Election,” said Richard Perry, market analyst at Hantec Markets, in a note. “Although the U.K. election will not start to impact markets until Thursday night, the potential volatility will be huge and traders appear unwilling to take a view with the opinion polls giving such a wide range of views.”
The euro EURUSD, -0.6118% traded at $1.1264 compared with $1.1278 late Tuesday.
Economic news: Germany’s manufacturing orders slumped 2.1% in April, partly caused by a relatively low share of bulk orders, the economics ministry said Wednesday.