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| Goldman sparks bank shares rally | Goldman sparks bank shares rally |
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| Financial stocks across Europe have risen sharply after US banking giant Goldman Sachs announced surprisingly good first quarter results. | Financial stocks across Europe have risen sharply after US banking giant Goldman Sachs announced surprisingly good first quarter results. |
| The stronger-than-expected results led to hopes that the global financial crisis may finally be starting to ease. | The stronger-than-expected results led to hopes that the global financial crisis may finally be starting to ease. |
| In London, Lloyds Banking Group rose 10.6%, Barclays climbed 11.4% and Royal Bank of Scotland added 4.8%. | In London, Lloyds Banking Group rose 10.6%, Barclays climbed 11.4% and Royal Bank of Scotland added 4.8%. |
| Leading banks in France and Germany also climbed strongly, helping to push stock markets higher. | Leading banks in France and Germany also climbed strongly, helping to push stock markets higher. |
| Strong gains | Strong gains |
| In France, BNP Paribas rose 7.1%, Societe Generale added 7% and Credit Agricole shares climbed 6.9%. | In France, BNP Paribas rose 7.1%, Societe Generale added 7% and Credit Agricole shares climbed 6.9%. |
| In Germany, shares in Commerzbank rose 10.5% while Deutsche Bank added 4.7%. | In Germany, shares in Commerzbank rose 10.5% while Deutsche Bank added 4.7%. |
| It's not going to be pretty reading on the corporate results front this quarter Justin Urquhart Stewart, Seven Investment Management | It's not going to be pretty reading on the corporate results front this quarter Justin Urquhart Stewart, Seven Investment Management |
| The strong gains were due to the $1.8bn (£1.2bn) net quarterly profit announced by Goldman Sachs on Monday. | The strong gains were due to the $1.8bn (£1.2bn) net quarterly profit announced by Goldman Sachs on Monday. |
| The results were much better than analysts had expected. In the previous quarter, the bank had reported its first quarterly loss since going public in 1999. | The results were much better than analysts had expected. In the previous quarter, the bank had reported its first quarterly loss since going public in 1999. |
| However, despite its strong performance, the bank said trading conditions continued to be tough. | |
| "We continue to be cautious about the near-term outlook for our businesses," said chief financial officer David Viniar. | |
| The financial system still faces "extremely difficult macroeconomic conditions," he added. | |
| Goldman also announced plans to raise $5bn from shareholders in order to repay some of the $10bn emergency loan it received from the US government to help it through the financial crisis. | Goldman also announced plans to raise $5bn from shareholders in order to repay some of the $10bn emergency loan it received from the US government to help it through the financial crisis. |
| Last week, Wells Fargo, another big US bank, announced that it would make a profit of $3bn (£2bn) for the first three months of 2009. This also sparked a rally in banking stocks. | Last week, Wells Fargo, another big US bank, announced that it would make a profit of $3bn (£2bn) for the first three months of 2009. This also sparked a rally in banking stocks. |
| Reality check | Reality check |
| The results from Goldman Sachs have increased investor confidence that the worst may be over for financial firms and, by extension, the global economic downturn. | The results from Goldman Sachs have increased investor confidence that the worst may be over for financial firms and, by extension, the global economic downturn. |
| "The financials were the main reason behind the last 12 months of pain, so it is only right that investors look to these heavyweights to lead us back up," said Chris Hossain at ODL Securities. | "The financials were the main reason behind the last 12 months of pain, so it is only right that investors look to these heavyweights to lead us back up," said Chris Hossain at ODL Securities. |
| However, some analysts cautioned against becoming too optimistic on the back of isolated results. | However, some analysts cautioned against becoming too optimistic on the back of isolated results. |
| "The Goldman figures are remarkably good, but bank results are mercurial and you have to pick through them carefully," said Justin Urquhart Stewart at Seven Investment Management. | "The Goldman figures are remarkably good, but bank results are mercurial and you have to pick through them carefully," said Justin Urquhart Stewart at Seven Investment Management. |
| He believes the results from Goldman Sachs and Wells Fargo will not set the tone for upcoming results in general. | He believes the results from Goldman Sachs and Wells Fargo will not set the tone for upcoming results in general. |
| "It's not going to be pretty reading on the corporate results front this quarter," he said. | "It's not going to be pretty reading on the corporate results front this quarter," he said. |