Nomura upgrades Lloyds Banking Group (LLOY.LN) to buy from reduce, and lifts target price to 100p from 58p. “As substantially all the highest-risk assets are believed to be included in the asset-protection-scheme, we believe Lloyds’ tangible book value per share has among the least downside
risk of major banks, after the first loss piece is exhausted,” it says. Adds
that with signs that economies and asset values are stabilising, markets are
beginning to discount recovery and a turn in the credit cycle. “While we still
see risks around credit quality, the read-across from US and European banks
indicates some positives,” it says. Shares +3.1% at 80p.
Latvia and the IMF seem to have come to agreement on lending terms to unlock EUR200M from the Fund, notes RBS. Fails still, however,
to understand Latvia’s logic defending its pegged LVL “at all cost,” instead of
taking “a much easier route” and devaluing to a competitive level. Says doing
so will require restructuring some private sector liabilities, but notes that
these liabilities are owed to foreign, mostly Swedish owned banks, which can
“surely look after themselves.” Adds with “much better credit fundamentals than Latvia,” there wouldn’t necessarily be a domino effect on pegged currencies in Estonian and Lithuania if Latvia devalues.
European stocks climbed higher Monday, with optimism regarding the global economic outlook continuing to prompt investors into pushing more cash into the equity asset class.
By 0805 GMT, the Dow Jones pan-European Stoxx 600 index was up 0.6% at 220.9. London’s FTSE 100 index was 0.2% higher at 4587.65, Frankfurt’s DAX index pushed up 0.8% to 5269.14 and the CAC-40 index in Paris up 0.7% at 3388.33.
This session’s rally follows several days of straight gains, with London’s
FTSE heading for its eleventh day of consecutive gains, its longest winning
streak for four years.
ING described the current optimism as “infectious” with analysts moving
recommendations in a positive direction and upgrading earnings forecasts. “This should underpin recent gains and is likely to add further fuel to the rally,” the brokerage said.
It noted that in March, earnings momentum was negative in all sectors, except health. Now half of all sectors are seeing upgrades, led by resources,
financials and technology.