LONDON, Oct 27 — European stock markets rose solidly at the start of trading today as investors reacted to weekend eurozone bank ‘stress’ tests which cleared all but 25 leading banks.

London’s benchmark FTSE 100 index climbed 0.79 per cent to 6,439.13 points at the open.

Frankfurt’s DAX 30 increased by 1.03 per cent to 9,080.80 points and in Paris the CAC 40 gained 1.02 per cent to 4,170.84 compared with Friday’s closing value.

The euro meanwhile firmed against other major currencies the European Central Bank gave a large majority of banks in the region a clean bill of health.

A large majority of eurozone banks were given a clean bill of health yesterday by the European Central Bank, fuelling hopes that a major cause of economic uncertainty could soon be eliminated, analysts said.

In the most in-depth and stringent audit of eurozone banks ever undertaken—aimed at preventing a repetition of the crisis that nearly led to the euro’s collapse—the ECB found that 25 out of a total 130 banks had a combined capital shortfall of €25 billion (RM101 billion) at the end of 2013.

However, of those, 12 banks have already since made up €15 billion euros of the shortfall, leaving 13 banks with a hole in their combined balance sheets of around €10 billion.

“While markets look to digest the aftermath of the weekend stress tests and whether they mark a return of confidence in Europe’s banking system, the fact of whether they remain more or less credible than previous ones is less important than the fact that loan demand remains non-existent,” said Michael Hewson, chief market analyst at traders CMC Markets UK.

“That is likely to remain a problem, given concerns about the long term economic outlook in Europe,” he cautioned.

In Milan, the shares in two banks which failed the tests, Banca Monte dei Paschi di Siena (BMPS) and Banca Carige, fell heavily but other Italian bank shares rose sharply.

Shares in BMPS, the third-biggest Italian bank, plunged 15.15 per cent to €0.8485 and in Banca Carige by 17.83 per cent to €0.0765. — AFP