LONDON: European stock markets rose on Monday, recouping some of last week's heavy losses after news of a Portuguese state rescue for Banco Espirito Santo.
Banking shares got a particular boost from news of the nearly 5.0 billion euro ($6.7 billion) bailout, announced late on Sunday, ending a crisis that had rattled European markets for weeks.
Frankfurt's main DAX index rose 0.61 percent over Friday's close to end the day at 9,154.14 points.
London's benchmark FTSE 100 index closed largely flat at 6,677.52 points, while in Paris the CAC 40 added 0.34 percent to 4,217.22 points.
Portugal's PSI 20 index rose 0.98 percent to finish at 5,854.36 points after news of the EU-backed rescue plan.
"Slightly supportive for European shares is the announcement that the Bank of Portugal has taken over control of Banco Espirito and submitted a rescue plan for Portugal's second-biggest lender," said Markus Huber, senior analyst at brokers Peregrine & Black.
Global equity markets were jittery last week over patchy earnings reports and concerns that the US central bank could end its economic stimulus earlier than expected.
Wall Street's S&P 500 index posted its worst weekly loss in more than two years last week also fuelled by debt concerns in Argentina and concerns about the impact of Western sanctions on Ukraine.
"We've already heard names like Adidas, Siemens and Volkswagen speaking out about how their businesses are being affected by tensions in Ukraine and Russia," said Chris Weston at IG Markets.
BES rescue buoys markets:
US stocks on Monday were trading around the flatline, with the Dow Jones Industrial Average dipping slightly after shedding all of its gains for the year last week in its worst performance since January.
In mid-afternoon trading, the Dow lost 0.09 percent at 16,479.27. The broad-based S&P 500 gained 0.07 percent to 1,928.33, while the tech-rich Nasdaq Composite Index rose 0.20 percent to 4,361.48.
Portugal will inject 4.4 billion euros into Banco Espirito Santo, national bank governor Carlos Costa announced late Sunday amid fears of a catastrophic bank run.
The bank will be split into two entities, with its toxic assets isolated and its healthier assets regrouped in a new Novo Banco, Costa said.
Banking shares rallied on the news, with BNP Paribas raising 0.86 percent to 50.19 euros and Spain's Bankia gaining 0.49 percent.
The "bailout for Banco Espirito Santo has helped reduce the risk of banking contagion in Europe so bank stocks are getting some extra relief," said Jasper Lawler, a market analyst at CMC Markets.
"The BES episode will not be soon forgotten though... It has left many wondering how far we've come since the European debt crisis and whether another example is just around the corner."
HSBC also gained 0.91 percent to 635 pence as investors brushed aside news of a drop in first-half profits. The bank said earnings fell in the six months to the end of June because one-off gains were not repeated and after a weaker showing at its investment arm.
Rolls-Royce dipped 0.10 percent and Siemens fell 0.55 percent after news that Brussels had cleared the British company's sale of its specialist gas turbine operations to the German engineering giant.
Euro dips before ECB:
Meanwhile in foreign exchange trading on Monday, the euro dipped to $1.3414 from $1.3430 late in New York on Friday.
The European single currency eased to 79.66 pence from 79.82 pence on Friday. The pound rose to $1.6839 from $1.6817.
The European Central Bank and Bank of England both meet this week to set their respective interest rates.
On the London Bullion Market, the price of gold fell to $1,290.50 an ounce from $1,291.25.
Asian stock markets ended mixed on Monday as traders reacted to Chinese data showing a recovery in the world's second-largest economy, as well tracking Portugal and Friday's US jobs data.
In Washington, the Labor Department reported that the US economy added 209,000 jobs in July, down from June but maintaining the solid 200,000-plus monthly streak since February.
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