European equities rise as oil stocks, Italian banks advance * FTSEurofirst 300 index up 1.2 percent * Oil stocks index top sectoral gainer * Italian banks surge on likely state support (ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). Adds closing prices) By Atul Prakash and Danilo Masoni LONDON/MILAN, April 8 European equities rebounded on Friday as Italian banks rallied and energy stocks advanced, although a pan-European index was headed for its fourth straight week of losses. The STOXX Oil and Gas sub-index rose 3.5 percent to lead gains among sectors, as encouraging economic data from the United States and Germany helped oil prices to rally. Hopes that global oversupply could be ending helped as well. Shares in BP, Total and Eni rose 3.3 to 4.3 percent. Italian banks surged, with UniCredit gaining 9.7 percent, the biggest advance in the FTSEurofirst 300 index on hopes that the government will soon offer a plan to set up a fund to buy bad loans and plug capital shortfalls at banks. Shares in UniCredit, Italy's biggest bank by assets, also got some support from optimism over a cash call at smaller rival Popolare Vicenza, which UniCredit is guaranteeing Italian shares outperformed the broader market, with the benchmark FTSE MIB index rising 4.1 percent. Shares in the banks BMPS, Banco Popolare and UBI Banca jumped 7.9 to 10.9 percent. The Italian government is keen to end concern about the health of the banking system, which is burdened by 360 billion euros of bad loans. The FTSEurofirst 300 index ended 1.2 percent higher after falling 0.8 percent lower on Thursday, when the index slipped to a one-month low. It is still down nearly 10 percent this year and set for another weekly loss. German shares, up 1 percent, were underpinned by a survey showing the country's exports rose more than expected in February, a sign that foreign demand was picking up again. German publisher Axel Springer rose 8 percent to a three-month high after JP Morgan upgraded the stock to "overweight" from "neutral". However, Gjensidige, UPM-Kymmene and Swisscom fell 3.3 to 5.5 percent, the worst three performers in the FTSEurofirst 300 index. The shares were trading ex-dividend: buyers would not get the latest dividend payout. LINK - http://www.reuters.com/article/europe-stocks-idUSL5N17B4EC
French bank chief 'more worried about sector now than in 2009' The chairman of France's second-biggest retail bank is more worried about Europe's banking sector now, in some ways, than when he took the reins at BPCE bank during the depths of the global financial crisis in 2009. Francois Perol said on the sidelines of an economic conference in Italy on Saturday that negative interest rates in the euro zone were a major problem, squeezing interest margins in a way that was unsustainable over the longer term. "I am much more worried than I was in 2009 in certain respects," Perol said outside the closed-door conference, held on the shores of Lake Como. "It was 100 percent clear what had to be done (in 2009)," he added. "I think it's more of a difficult situation for banks (now) because fundamental changes are underway in an environment that's incredibly challenging due to negative interest rates." Perol's comments on negative rates are among the strongest from a big euro zone bank since the European Central Bank sent its deposit rate a little deeper into negative territory last month, in an effort to prod banks harder to increase lending. The euro zone is struggling with weak investment and high unemployment, but loan demand is weak as households pay down debt and companies are reluctant to expand. As a result, banks struggle to grow lending but have to pay to park surplus cash with central banks. They pay interest to their own depositors, however, so interest margins are squeezed. A European central bank official speaking on condition of anonymity told the conference that bank profitability had been affected by negative rates in some cases, but overall the policy had not led to a deterioration in lenders' balance sheets. On Thursday in Frankfurt ECB chief economist Peter Praet acknowledged negative rates would become a worry for banks' business models if they persisted for two or three years. Perol said regulatory uncertainty made the situation worse for banks, which were waiting for new capital rules to be finalised, including regulations aimed at further reducing the need for massive government bailouts of banks in a future crisis. Perol was put in charge of BPCE after it was created by a merger of cooperative banks Banque Populaire and Caisse d'Epargne to prevent - with state aid - their investment banking arm Natixis (CNAT.PA) from collapsing in the financial crisis. LINK - http://www.reuters.com/article/us-bcpe-rates-idUSKCN0X60I8
