European bank stocks fall and bonds rise despite SVB bailout

By Nell Mackenzie and Wayne Cole

LONDON/SYDNEY, March 13 (Reuters) – European bank stocks suffered their biggest decline in more than a year on Monday and fixed income markets showed a massive repricing in rate hike bets as Global efforts to limit the fallout from the Silicon Valley Bank (SVB) bankruptcy have not allayed fears.

* The dollar also fell as Wall Street heavyweights such as Goldman Sachs predicted the US Federal Reserve would not raise interest rates again next week, ending the biggest three-day rise in bonds short-term Treasury since 1987.

* The European banking index plunged 6%, after falling 3.8% on Friday. London-listed HSBC fell 1.45% after announcing it would buy the British subsidiary of Silicon Valley Bank for the symbolic sum of 1 pound ($1.21).

* Over the weekend, the Federal Reserve and US Treasury announced a series of measures aimed at stabilizing the banking system and said SVB depositors would have access to their deposits on Monday.

* The Fed also said it would make additional funds available through a new “term bank funding program,” which would offer loans of up to one year to depository institutions, backed by government bonds. Treasury and other assets held by these institutions.

* US authorities also intervened in Signature Bank of New York, the second bankruptcy in a few days.

* Monday’s decline meant that more than 99% of companies listed on Europe’s benchmark STOXX 600 index were trading at a loss. Only three stocks escaped the selloff, Qinetiq, Reckitt and Vantage Towers, which rose 0.4%, 0.2% and 0.1% respectively.

* Wall Street futures markets offered a silver lining as the benchmark S&P 500 index would open slightly higher.

* Federal Reserve Fund futures soared to rule out any possibility of a half-point rise from 70% ahead of last week’s SVB news. Instead, the futures implied about a 14% chance that the Federal Reserve would hold rates steady.

* Two-year Treasury yields rose 7 basis points at 0958 GMT to 4.63%, off last week’s high of 5.08%. Yields fell 66 basis points in just three sessions, a drop not seen since the Black Monday stock market crash of 1987.

* On the foreign exchange markets, the dollar index, which measures the performance of the greenback against a basket of six currencies, fell by 0.3%. The British pound and euro rose around 0.2%, while the Japanese yen rose more than 1%.

* Gold also rose nearly 1% to $1,885 an ounce, after rising 2% on Friday. Oil prices fell more than 1.5%, with Brent at 81.48 a barrel and US crude at $75.28 a barrel.

(Reporting by Nell Mackenzie; Editing in Spanish by Ricardo Figueroa)