Monte dei Paschi shares swing wildly as bailout fails but FTSE 100 and Europe shares flat

 
Jasper Jolly
MPS Bank Former Management Fined Five Million Euros
The Italian government is keen to avoid losses for retail bondholders (Source: Getty)

Shares in Banca Monte dei Paschi di Siena (MPS) were swinging wildly on Thursday as investors digested the news that the Italian bank is set for a government bailout.

Shares were suspended after steep falls. They closed at €16.30 on Wednesday, but traded at lows of €14.71 after opening at €15.00. However, they then recovered quickly to a gain of more than three per cent, with the possibility of heavy volatility ahead.

MPS admitted late last night that its private-sector bailout plan was unlikely to succeed, after it failed to find an anchor investor.

Read more: Monte dei Paschi fails to attract anchor investors to its share offer

The bank admitted it would use cash at a far quicker rate than previously envisaged, with shares slumping in response.

However, stocks in Italy were slightly up, as the rest of the index resisted any contagion.

Fashion companies received a seasonal boost, with shoewear brand TODS jumping in early trading, while eyewear company Luxottica Group gained half a per cent.

Stocks across the rest of Europe were flat in the traditional thin pre-Christmas trading, with the Dax regaining losses after a brief opening dip.

ITV led gains on the completely flat FTSE 100, gaining more than two per cent.

Inspection and certification company Intertek Group also increased, gaining over 1.3 per cent in morning trading.

Meanwhile mining stocks followed metals prices down, with Antofagasta taking the biggest hit. Glencore, Rio Tinto, and BHP Billiton completed the procession of miners at the bottom of the FTSE.

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