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Europe: Shares rally as French vote sparks rush into banking stocks
[MILAN] European shares rose sharply on Monday as risky assets staged a powerful rally after centrist Emmanuel Macron won the first voting round of France's presidential election, reducing risks of more political stress for the euro zone.
Shares in French companies and banks saw the biggest gains across the region with the euro zone's bank index rising more than 5 per cent to its highest level in 16 months and Paris blue chips hitting their highest since April 2015.
Mr Macron took a big step toward the presidency on Sunday by winning the first round of voting and qualifying for the May 7 runoff alongside euro sceptic far-right leader Marine Le Pen.
"Markets are likely to sigh in relief as some tail risk scenarios can be priced out... French banks alongside European banks in general will likely be the biggest winners," said UniCredit analysts in a note.
Europe's STOXX 600 index was up 1.7 per cent by 0722 GMT, while UK's FTSE added 1.8 per cent and Germany's DAX was up 2.3 per cent.
Nine of the top ten gainers on the pan-European index were banks with Commerzbank, Societe Generale and UniCredit leading the way, all up more than 8 per cent.
Brokers including Goldman Sachs, Citi and Kepler Cheuvreux all came out heavily in favour of European banks on Monday morning.