Italian Stocks Jump on Banking Consolidation

The FTSE MIB rose 0.7% to close at 42,008 on Tuesday, outperforming other European benchmarks with support from heavyweight banks as markets assessed the outlook of lending activity with a more consolidated banking sector. Banca Monte dei Paschi di Siena surged 6.3% after it secured 62.3% of Mediobanca's capital, cementing a €16 billion takeover that was long-resisted by the latter to form the third largest lender in the country. In the meantime, BPER Banca advanced 2.4% and Banco BPM jumped 2.1% as markets continued to assess the reported interest in a portion of the bank by Credit Agricole. On the monetary policy front, Italian BTPs were mostly unchanged ahead of the ECB's likely hold this week, further supporting lenders as most of the pressure on European bonds were focused in France due to their political turmoil.