LONDON, March 23 Investors hoovered up banking
stocks and the bonds of some of the bloc's weakest countries on
Thursday after demand for the final round of ultra-cheap bank
loans from the European Central Bank topped expectations.
Some 474 banks took up 233.5 billion euros of four-year
loans in the last targeted longer-term refinancing operation
(TLTRO), well above the 125 billion euros expected in a Reuters
poll, suggesting that banks are keen to stock up on cheap cash
in anticipation of a continued rise in lending.
Analysts said government bonds are likely to benefit as
banks are expected to invest some of that cash in these assets.
"The talk that this money would be used for carry trades
seems to be confirmed by these results and the market reaction,"
said ING rates strategist Benjamin Schroeder.
Yields, which move inversely to prices, of Portuguese
, Spanish and Italian bonds
fell after the results and were down 5-7 basis
points on the day. That narrowed the gap with German equivalents
which were little changed on the day.
An index of European banking stocks hit a session
high after the results, up 0.6 percent on day.
(Reporting by John Geddie and Helen Reid; editing by Dhara