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| Version 1 | Version 2 |
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| Banks gain on stress test hopes | Banks gain on stress test hopes |
| (9 minutes later) | |
| Global bank shares have gained ground on hopes that US banks will not face huge shortfalls in the amount of money they need to raise. | Global bank shares have gained ground on hopes that US banks will not face huge shortfalls in the amount of money they need to raise. |
| In the US, Citigroup rose 5% and Bank of America gained 4.6%. In the UK, Lloyds Banking Group closed up 10.5% while Standard Chartered added 8.5%. | In the US, Citigroup rose 5% and Bank of America gained 4.6%. In the UK, Lloyds Banking Group closed up 10.5% while Standard Chartered added 8.5%. |
| Shares in Swiss bank UBS rose 2.3% despite it reporting further losses. | |
| US banks are being tested to see if they have sufficient cash reserves to cope should the recession worsen. | US banks are being tested to see if they have sufficient cash reserves to cope should the recession worsen. |
| The gains in banks helped to push up the UK's FTSE 100 index. It rose 2.2%, or 93.72 points, to close at 4,336.94. | The gains in banks helped to push up the UK's FTSE 100 index. It rose 2.2%, or 93.72 points, to close at 4,336.94. |
| After rising in morning trade, France's Cac 40 index closed down 0.4% while Germany's Dax index fell 1%. | After rising in morning trade, France's Cac 40 index closed down 0.4% while Germany's Dax index fell 1%. |
| On Wall Street, the Dow Jones index was 0.2% lower at 8,408.34 in early afternoon trade. | On Wall Street, the Dow Jones index was 0.2% lower at 8,408.34 in early afternoon trade. |
| Royal Bank of Scotland Group - 5 May 2009*Chart shows local time | Royal Bank of Scotland Group - 5 May 2009*Chart shows local time |
| Scepticism | Scepticism |
| Markets have been anxiously anticipating the results of the stress tests, which are due to be released on Thursday. | Markets have been anxiously anticipating the results of the stress tests, which are due to be released on Thursday. |
| Justifiable though the market recovery is, there are some huge bumps ahead Howard Wheeldon, BGC Partners Check UK bank shares UBS cautious as losses stack up RBS financial chief quits group | Justifiable though the market recovery is, there are some huge bumps ahead Howard Wheeldon, BGC Partners Check UK bank shares UBS cautious as losses stack up RBS financial chief quits group |
| And while reports suggest that about half of the 19 largest US banks will be instructed by regulators to raise more capital, investors are betting that sums needed will be manageable, analysts said. | And while reports suggest that about half of the 19 largest US banks will be instructed by regulators to raise more capital, investors are betting that sums needed will be manageable, analysts said. |
| However, there was still plenty of uncertainty, according to Howard Wheeldon, senior strategist at BGC Partners. | However, there was still plenty of uncertainty, according to Howard Wheeldon, senior strategist at BGC Partners. |
| "Justifiable though the market recovery is, there are some huge bumps ahead. Thursday may be one of those big bumps, in the devil in the details of what US banks require," he said. | "Justifiable though the market recovery is, there are some huge bumps ahead. Thursday may be one of those big bumps, in the devil in the details of what US banks require," he said. |
| There has been some scepticism about the US stress tests and what useful information they will offer. | There has been some scepticism about the US stress tests and what useful information they will offer. |
| US investor Warren Buffett - whose Berkshire Hathaway company holds stakes in three banks that underwent the tests - said the tests did not properly assess the industry's health and ignored differences in business models. | US investor Warren Buffett - whose Berkshire Hathaway company holds stakes in three banks that underwent the tests - said the tests did not properly assess the industry's health and ignored differences in business models. |
| Gauging losses | Gauging losses |
| US Federal Reserve chairman Ben Bernanke said that the tests would allow regulators to gauge the potential losses, revenues and reserve needs for the US's largest banks in a scenario in which the economy declines more steeply than is generally anticipated. | US Federal Reserve chairman Ben Bernanke said that the tests would allow regulators to gauge the potential losses, revenues and reserve needs for the US's largest banks in a scenario in which the economy declines more steeply than is generally anticipated. |
| He told Congress that banks would be required to develop plans to make sure they have enough capital to act as a buffer and the Treasury would offer capital as needed. | He told Congress that banks would be required to develop plans to make sure they have enough capital to act as a buffer and the Treasury would offer capital as needed. |
| "The purpose of the exercise is to ensure that banks will have a sufficient capital buffer to remain strongly capitalised and able to lend to creditworthy borrowers even if economic conditions are worse than expected," he said. | "The purpose of the exercise is to ensure that banks will have a sufficient capital buffer to remain strongly capitalised and able to lend to creditworthy borrowers even if economic conditions are worse than expected," he said. |
| He added that markets still had "substantial concerns" about the banking industry. | He added that markets still had "substantial concerns" about the banking industry. |
| Recovery signs? | Recovery signs? |
| In a trading update, Standard Chartered, which focuses on emerging markets, said it had recorded record income and profit during the first three months of 2009, although it did not release figures. | In a trading update, Standard Chartered, which focuses on emerging markets, said it had recorded record income and profit during the first three months of 2009, although it did not release figures. |
| Standard Chartered - 5 May 2009*Chart shows local time | Standard Chartered - 5 May 2009*Chart shows local time |
| Its shares closed up were up 8.5% at £11.50, having at one point risen above £12 - the highest level seen this year. | Its shares closed up were up 8.5% at £11.50, having at one point risen above £12 - the highest level seen this year. |
| "Despite the challenging macroeconomic environment and the continuing difficulties in the financial markets, the group remains in very good shape and we are selectively growing the business," the bank said. | "Despite the challenging macroeconomic environment and the continuing difficulties in the financial markets, the group remains in very good shape and we are selectively growing the business," the bank said. |
| Also on Tuesday, UBS reported a net loss of 1.98bn Swiss francs ($1.75bn; £1.2bn) for the first quarter, and said it expected loan losses to keep rising. | Also on Tuesday, UBS reported a net loss of 1.98bn Swiss francs ($1.75bn; £1.2bn) for the first quarter, and said it expected loan losses to keep rising. |
| However, the loss was considerably smaller than the 9.56bn Swiss francs reported in the final three months of 2008. | However, the loss was considerably smaller than the 9.56bn Swiss francs reported in the final three months of 2008. |
| And analysts said that the new management was taking necessary steps to turn the business around. | And analysts said that the new management was taking necessary steps to turn the business around. |