* European bank shares rise after Santander rescues rival
* All eyes on "Triple Threat Thursday"
* Oil plunges after supply data
* Euro hit by report ECB may cut inflation outlook
(Changes dateline to New York; adds Wall Street open; updates
By Hilary Russ
NEW YORK, June 7 A smoothly executed rescue of
Spain's struggling Banco Popular lifted European bank stocks on
Wednesday, while U.S. stock and bond investors showed caution
ahead of Thursday's British vote, an ECB meeting and testimony
by ex-FBI chief James Comey.
Oil prices dipped on renewed concerns about the efficacy of
OPEC-led production cuts and a Mideast political rift, then
extended losses after EIA data showed a surprise build in U.S.
U.S. crude fell 4.21 percent to $46.16 per barrel
and Brent was last at $48.37, down 3.49 percent on the
In Spain, the absorption of Popular by the country's biggest
bank Santander for a nominal 1 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
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 weaker mood.
European banking shares rose 1.38 percent.
"The market has taken Banco Popular as positive news because
essentially this is not a bankruptcy but a sort of rescue, even
if its subordinated bondholders have been sharply hit," said
Giuseppe Sersale, a fund manager at Anthilia Capital in Milan.
The bank rescue does, however, underline 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.
The pan-European FTSEurofirst 300 index rose 0.13
percent and MSCI's gauge of stocks across the globe
gained 0.04 percent.
The euro turned shaky after reports suggested the ECB
would lower its inflation targets. It was last down 0.23 percent
"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."
The ECB meeting is one of three events that ING currency
strategist Viraj Patel said had been dubbed 'Triple Threat
Thursday,'... an event-filled day that could send global markets
on a bumpy ride."
Also on Thursday will be a surprisingly closely-fought
British election and U.S. 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.
On Wall Street, shares opened slightly higher, turned
negative and then rose again.
The Dow Jones Industrial Average rose 18.41 points,
or 0.09 percent, to 21,154.64, the S&P 500 gained 2.44
points, or 0.10 percent, to 2,431.77 and the Nasdaq Composite
added 21.12 points, or 0.34 percent, to
"It's the calm before the storm. We have a quiet week in
terms of economic data and there's a general global unease at
the moment," said Scott Brown, chief economist at Raymond James
in St. Petersburg, Florida.
"The impact of Comey's statement really depends on what he
says, and anyway these hearings are long and dragged out. The UK
elections could have an impact if there is a hung parliament and
the various polls are adding a level of uncertainty."
(Additional reporting by Patrick Graham, Danilo Masoni and
Stephen Eisenhammer in London, Tanya Agrawal in Bengaluru and
Saqib Iqbal Ahmed in New York; Editing by Nick Zieminski)