European markets rise on easing Portugal concerns

LONDON, July 11 (AFP): European equities rebounded slightly Friday from sharp losses during the week, as Lisbon moved to allay fears of a potential banking crisis in Portugal.
London's FTSE 100 added 0.16 per cent to 6,682.99 points in midday deals, Frankfurt's DAX 30 gained 0.13 per cent to 9,672.61 points and the Paris CAC 40 won 0.57 per cent to 4,325.78.
Milan stocks rose 1.56 per cent and Madrid increased by 1.16 per cent.
Across in Portugal, Lisbon's PSI 20 index jumped 2.15 per cent to 6,236.60 points-one day after plunging by 4.18 per cent.
Equities suffered heavy falls on Thursday as mounting troubles at Portugal's largest listed lender, Banco Espirito Santo (BES), sparked fears of a possible default and a return to the dark days of the eurozone debt crisis.
"Traders are a little calmer today, figuring-rightly or wrongly-that we're not headed for Eurocrisis 2.0," ETX Capital analyst Daniel Sugarman told AFP.
Portuguese Prime Minister Pedro Passos Coelho on Friday ruled out state aid for BES.
"There is no reason for the state to intervene in a bank which has solid capital and which has a comfortable margin to deal with any eventuality, even the most adverse," he told reporters.
In another positive development, Portugal's regulator lifted its suspension in trading of BES shares on Friday.
The bank' shares were in for a roller coaster ride, but showed a gain of around 4.0 per cent in midday trades at 0.53 euros.
"Investor sentiment has stabilized after Portuguese bank concerns sparked sharp declines in European and US equities and pushed bund yields to record lows and peripheral spreads wider yesterday," said Barclays analyst Sreekala Kochugovindan.
"European assets have retraced much of yesterday's pessimism... From the view point of the banking system as a whole, we think the sovereign financial implications of the Espirito Santo saga are limited."
Concerns that the bank's troubles could have a wider impact on Portugal-which only two months ago exited a three-year, 77 billion euro ($106 billion) international bailout-had sent shockwaves through global markets on Thursday as questions resurfaced over eurozone debt.
The Portuguese bank has been hit by suspicion that its holding company, Espirito Santo International (ESI), covered up a 1.3 billion euro hole in the accounts.
BES said Friday that its exposure to debt in the Espirito Santo group reached 1.18 billion euros at the end of June.