There have been multiple different reports about what could happen. Last night Reuters claimed that the government could take another €2 billion stake in Italy’s oldest bank, while this morning La Stampa (an Italian newspaper) stated that the country could ask for a €15 billion European Stability Mechanism loan, which would be used to aid not only Monte dei Paschi but a few of Italy’s other ailing banks.
Of course nothing has been confirmed, and the precarious political situation in Italy is going to make doing anything a lot more difficult. However, that hasn’t stopped the European banking sector, including those under-fire Italian stocks, from lifting their respective indices, with the DAX and CAC rising 1% and 0.9% respectively.
The FTSE, which had a sluggish couple of days at the start of the week, has also benefited from this renewed banking optimism, jumping more than 50 points after the bell. While the morning’s focus is going to remain on Italy, the UK also has a couple of pieces of data. The manufacturing production reading is expected to fall from 0.6% to 0.2% month-on-month, while its industrial counterpart is forecast to jump from -0.4% to 0.2%.