European Stocks Climb for Second Day as Banks, Insurers Rally

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September 26, 2011, 5:25 AM EDT By Sarah Jones

Sept. 26 (Bloomberg) -- European stocks climbed, erasing earlier losses, as finance ministers and central bankers urged policy makers in Europe to intensify efforts to contain the region’s debt crisis. U.S. futures rose while Asian shares fell.

BNP Paribas SA, France’s biggest lender, led a rally in bank shares. Dexia SA jumped 7.3 percent amid a report the Belgian bank is ready to sell 20 billion euros ($27 billion) of bond assets.

The benchmark Stoxx Europe 600 Index rallied 1.8 percent to 220.08 at 10 a.m. in London, rebounding from an earlier loss of as much as 1.4 percent. Futures on the Standard & Poor’s 500 Index gained 0.8 percent while the MSCI Asia Pacific Index sank 2.4 percent to the lowest since May 2010.

More than $3.5 trillion was wiped from equity values last week, driving the MSCI All-Country World Index of 45 nations into a bear market as speculation grew that policy makers are struggling to contain a debt crisis that has engulfed Europe and has Greece teetering on the edge of a default.

The Stoxx 600 has tumbled 24 percent from its this year’s high on Feb. 17, leaving the gauge trading at about 9.2 times the estimated earnings of its companies, near the lowest valuation since March 2009, Bloomberg data show.

U.S. Treasury Secretary Timothy F. Geithner warned at the annual meeting of the International Monetary Fund that failure to combat the Greek-led turmoil threatened “cascading default, bank runs and catastrophic risk.”

Solution Is Needed

Bank of Canada Governor Mark Carney estimated 1 trillion euros ($1.3 trillion) may have to be deployed while U.K. Chancellor of the Exchequer George Osborne said a solution is needed by the time that Group of 20 leaders meet in Cannes, France, on Nov. 3-4.

Billionaire investor George Soros said “something needs to be done” to safeguard Europe’s banks because Greece may be unable to avoid default. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said advanced economies will stall over the next year as Europe slides into a recession.

--Editor: Andrew Rummer

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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