UCG Unicredit Spa

By Joshua Kirby

Deutsche Bank AG led Europe's bank shares higher in early trade Monday, recouping some losses after a selloff at the end of last week.

However, banking turmoil might not yet be over, some analysts warned.

At 0730 GMT, Deutsche shares traded 3.8% higher at EUR8.86, recovering some of the previous week's consecutive losses, including a dip of as much as 15% on Friday. Fellow German lender Commzerbank AG rose 2.7%, while France's Societe Generale SA and BNP Paribas SA gained 1.2% and 2%, respectively, having led the blue chip CAC 40 index when the market opened. Spain's Banco Santander SA rose 2.3%; Italy's UniCredit SpA gained 1.2%.

The concerns around Deutsche, Germany's largest lender, last week brought fresh stress to the European banking sector, days after UBS Group AG agreed on a deal to take over struggling rival Credit Suisse Group AG. Market conditions can change very quickly in this environment, analysts Francesco Pesole at ING said in a research note. Shares in UBS on Monday gained only slightly to CHF17.37.

"Friday's turmoil suggests that confidence among European bank bondholders is far from fully restored after the Credit Suisse saga," Mr. Pesole said, though he noted that the share crash may have been overdone.

Indeed, the sector should now be able to look forward with more confidence, analysts at Jefferies said in a note. Many of the concerns raised by investors and media have now passed, and European banks are perhaps in the strongest position they have been in since the last global financial crisis, Jefferies said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

March 27, 2023 04:14 ET (08:14 GMT)

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