European stocks open higher as oil jumps 4% – CNBC

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Meanwhile, Asia’s banks and financial stocks remained under pressure overnight, following drops in their Europe and the U.S. counterparts as concerns mounted over their potential performance in a low-growth and low-interest rate environment.

Much of the concern among investors has been stoked by talk of negative interest rates. The Bank of Japan, which currently has a negative interest rate policy, defended its tactic on Friday, saying that the global market rout has not been caused by its policy. Federal Reserve Chair Janet Yellen also said on Thursday that the central bank is “taking a look” at negative interest rates after deciding against the policy in 2010.

“Negative rate is the most used word in the media which is scaring investors. It is an uncharted territory and no-one know what the repercussions of this are. It is this fear which is giving a birth that perhaps we are going to face the worst market turmoil of all times,” Naeem Aslam, chief market analyst at AvaTrade, wrote in a note on Friday.

“Central banks need to reassure the market that they have enough tools to handle any kind of situation and negative rates is just not the only one.”

Negative interest rate talk coupled with concern over the portfolio of bad loans that some European lenders saw banks hammered in trade on Thursday. But the sector saw a rebound on Friday thanks to positive earnings.

Germany’s Commerzbank posted fourth quarter net profit in line with analyst expectations thanks to lower provisions for bad loans, sending shares over 14 percent higher.

Many of the Italian banks – which have been under pressure – rebounded too, though troubled lender Banca Monte dei Paschi di Siena was down over 11 percent after larger rival UBI Banca ruled out a tie-up with the bank.

Analysts said the overall banking sector is healthy and much of the selling has been driven by negative sentiment.

“I think the market at the moment is being driven by fear rather than fundamentals…the operating environment is challenging not dreadful and the stock price reaction suggests it’s dreadful,” Simon Smiles, chief investment officer for the ultra-high net worth at UBS Wealth Management.

European stocks open higher as oil jumps 4% – CNBC