Reply #8: Banks lead stocks higher; oil hits six-month peak [View All]

[Ghost Dog]

LONDON (Reuters) – World stocks rose for a third day running on Tuesday with banking stocks leading the gains in Europe, while oil hit a six-month peak. Bank stocks rallied on Wall Street on Monday after sources said major banks may soon repay government bailout funds.

Britain has held talks with investors to gauge their interest in buying its stakes in part-nationalized banks and could begin selling its holdings within a year, according to a source familiar with the matter. UK Financial Investments, which manages Britain's stakes in Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L), has sounded out investors who may be interested in buying some of its holdings, the source said.

Last week's pullback in the benchmark MSCI world equity index (.MIWD00000PUS), coming after nine weeks of uninterrupted gains, proved short-lived as expectations that the worst of the global downturn might be over prompted investors to buy back risky assets. "Overall the market is again playing on the possibility that we may be seeing the end of the global recession and that is pushing risk appetite up," said Antje Praefcke, currency strategist at Commerzbank in Frankfurt.

The MSCI index rose 1 percent to hit a one-week high, while the FTSEurofirst 300 index (.FTEU3) added 0.9 percent. Banking shares were one of the biggest risers on the day.

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Emerging stocks (.MSCIEF) rose 2 percent.

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