* Banking shares rise after Santander rescues rival Popular
* Mood still shaky, yen gains further
* All eyes on "Triple Threat Thursday"
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, June 7 The smoothly executed rescue of
Spain's struggling Banco Popular prodded European banking stocks
higher on Wednesday in financial markets dominated by caution
ahead of a trio of major events on Thursday.
The absorption of Popular by Spain's biggest bank Santander
for a nominal one euro was the first use of a regime to
deal with failing banks adopted after the 2008 financial crisis
and made barely a ripple in Europe's stock and debt markets.
Indeed, as the morning wore on the success of the process
pushed shares in many major banks higher, supporting a recovery
for Madrid's stock market and fending off this week's broadly
But the rescue also underlines the risks to growth, banking
and government debt burdens that are likely to delay a major
switch in language and policy direction by the European Central
Bank at its meeting on Thursday.
That in turn has kept the euro in check this week and it was
down 0.15 percent against the dollar in morning trade in Europe.
"Maybe tomorrow's ECB meeting sees nothing but platitudes
and disappoints a market that is getting ahead of itself," said
Societe Generale analyst Kit Juckes,
"But (for us) that would be a huge euro buying opportunity,
because ECB normalisation IS coming. And when it does, the euro
simply won't be able to sustain undervalued levels for long."
European blue chip shares had risen by 0.1-0.2 percent by
0850 GMT and Madrid's IBEX recovered from
early losses to trade flat on the day. European banking
shares rose 1.2 percent
Oil prices, however, were again almost 1 percent lower and
the flood of money into the perceived security of Japan's yen
this week continued.
It was up another 0.2 percent at 109.17 yen per dollar - a
7-week high. The greenback has lost more than 1 percent so far
this week, pressured by a sharp drop in U.S. Treasury yields to
A surprisingly closely-fought British election set for
Thursday is weighing on investors' minds along with Senate
testimony from James Comey, the former FBI chief fired by
President Donald Trump.
Any damaging revelations in Comey's testimony are likely to
further hurt Trump and take the wind out of his plans to roll
back regulations and overhaul the tax system - an agenda that
had sent the dollar to 14-year highs earlier this year.
"Tomorrow’s what is being dubbed as 'Triple Threat
Thursday', ... an event-filled day that could send global
markets on a bumpy ride," said ING currency strategist Viraj
(Additional reporting by Kit Rees, Jemima Kelly and Abhinav
Ramnarayan; Editing by Mark Potter)