Erste Group Leads Czech Shares to Four-Month High on Euro Relief
Erste Group Bank AG (RBAG) led Czech shares to the highest in four months as German Chancellor Angela Merkel signaled support for the European Central Bank’s plan to stem the region’s debt crisis, boosting demand for riskier assets.
The stock rose 1.9 percent to 408 koruna by 11:42 a.m. in Prague, adding to a 3.8 percent rally yesterday and headed for its steepest two-day gain in six weeks. The 14-member PX (PX) equity index, in which the Austrian bank has a 21 percent weighting, rose 0.5 percent to 945.60, the highest since April 5.
European stocks, the euro and Spanish bonds gained before U.S. data that may show the index of leading economic indicators in the world’s largest economy rebounded in July. Merkel said yesterday in Ottawa the ECB’s insistence on conditionality in return for helping cut borrowing costs for indebted governments matches her priorities. Bundesbank President Jens Weidmann earlier objected to ECB President Mario Draghi’s proposals.
“Investors have recently been concerned about the mounting split between Draghi and Bundesbank’s chief Weidmann or members of the German ruling coalition,” analysts at Cyrrus brokerage in Brno, Czech Republic, wrote in a report today. “Merkel’s more reconciliatory attitude has largely dispersed these concerns.”
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