By Sara Sjolin and Victor Reklaitis, MarketWatch

Embattled German bank to sell insurance unit amid bailout buzz

European stocks closed with firm gains on Wednesday, as a rally for embattled Deutsche Bank AG sparked a banking-sector recovery, while oil companies rose amid of a closely watched OPEC meeting in Algeria.

The Stoxx Europe 600 index jumped 0.7% to end at 342.57, trimming its monthly loss to 0.3%.

"European equity markets are positive, following oil prices higher, as investors eye Algiers in the hope that today's OPEC meeting will reach some compromise," said Rebecca O'Keeffe, head of investment at Interactive Investor, in a note.

"Although an agreement to curb output today would be a major surprise, the debate may pave the way for a potential deal at their next meeting," she added.

Oil prices were choppy on Wednesday, but traded in the green by day's end in Europe. West Texas Intermediate crude was up 1.2% at $45.22 a barrel, while Brent added 1.6% to $47.23 a barrel. Market players are shifting their focus to November (http://www.marketwatch.com/story/crude-higher-but-market-faces-long-wait-for-next-opec-move-on-output-2016-09-28) as the time when the Organization of the Petroleum Exporting Countries could decide on a more definitive plan to curtail output that has suppressed prices for two years.

The gains helped fuel optimism over Europe's commodity companies, with shares of Total SA (TOT) (TOT) up 0.5%, and BP PLC (BP.LN) (BP.LN) and Repsol SA (REPYY) both 1% higher.

Deutsche Bank boost: Shares in Deutsche Bank (DBK.XE) (DBK.XE) rose as much as 4% in Wednesday trade, before paring gains to finish up 2%.

The move came after a report in Die Zeit that the German government is working on a rescue plan for the bank (http://www.marketwatch.com/story/german-government-preparing-rescue-plan-for-deutsche-bank-report-2016-09-28). Germany's finance ministry, however, dismissed the story as "false," according to reports.

Deutsche Bank Chief Executive John Cryan late Tuesday denied reports that he had asked the government for assistance, telling German newspaper Bild that a state rescue is "out of the question."

The bank -- Germany's biggest -- earlier this week dropped to an all-time closing low on reports the government was ruling out any potential state aid for it.

Read:Deutsche Bank's woes not a Lehman moment, says UBS chairman Axel Weber (http://www.marketwatch.com/story/deutsche-banks-woes-not-a-lehman-moment-says-ubs-chairman-axel-weber-2016-09-28)

A deal to sell its Abbey Life insurance business to Phoenix Group (http://www.marketwatch.com/story/deutsche-bank-sells-abbey-life-for-12-billion-2016-09-28) for EUR1.09 billion ($1.23 billion), also helped lift the bank's stock on Wednesday.

"It seems that investors are choosing to focus on CEO John Cryan's reassuring comments ... rather than the unsubstantiated rumors currently flying around," said Connor Campbell, financial analyst at Spreadex, in a note.

Deutsche's rebound on Wednesday fueled gains for the entire sector, with shares of Banco Santander SA (SAN)(SAN) up 1.3%, BNP Paribas SA (BNP.FR) rising 1% and Commerzbank AG (CBK.XE) 1.3% higher.

Other movers: Shares in Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) rose 1% after the bank agreed to pay $1.1 billion (http://www.marketwatch.com/story/rbs-pays-11-billion-to-settle-lawsuits-in-us-2016-09-28-34851318) to a U.S. regulator to settle two lawsuits related to mortgage-backed securities. The charge was within the amount RBS set aside in provisions.

Also in London, Tui AG shares gained 1.2% after the travel operator said it was confident of delivering between 12% and 13% growth in underlying earnings (http://www.marketwatch.com/story/tui-says-on-track-for-12-13-fy-earnings-growth-2016-09-28) for the year that ends Sept. 30.

Deutsche Post AG (DPW.XE) added 0.3% after the courier company said it is buying UK Mail Group for GBP242.7 million (http://www.marketwatch.com/story/deutsche-post-strikes-deal-to-buy-uk-mail-2016-09-28) ($315.5 million).

Shares in Anheuser-Busch InBev NV (ABI.BT) (ABI.BT) rose 1.2% as the brewing giant's shareholders approved all resolutions related to its $100 billion-plus megamerger with rival SABMiller (SAB.JO) . SABMiller shareholders also approved the deal (http://www.marketwatch.com/story/sabmiller-shareholders-approve-ab-inbev-merger-2016-09-28-6485648), helping send shares 0.6% higher.

Indexes: The U.K.'s FTSE 100 index rose 0.6% to end at 6,849.38 (http://www.marketwatch.com/story/ftse-100-breaks-3-day-losing-streak-as-oil-majors-rebound-2016-09-28), with the oil majors helping the benchmark higher.

Germany's DAX 30 index advanced 0.7% to 10,438.34, while France's CAC 40 index gained 0.8% to 4,432.45.

Economic news: European Central Bank President Mario Draghi reiterated the need for structural reforms to boost economic growth.

The central bank boss -- in a welcome address at an ECB conference in Frankfurt -- also said the euro area needs "more robust policy prescriptions" to promote growth.

 

(END) Dow Jones Newswires

September 28, 2016 12:36 ET (16:36 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Feb 2024 to Mar 2024 Click Here for more FTSE 100 Charts.
FTSE 100
Index Chart
From Mar 2023 to Mar 2024 Click Here for more FTSE 100 Charts.