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European stock markets rise after Portugal bank rescue

European stock markets rose on Monday, supported by a Portuguese state rescue for Banco Espirito Santo.

The $6.6 billion bailout, announced late on Sunday, helped to remove some uncertainty from financial markets and helped to boost share prices across Europe's banking sector.

The euro meanwhile inched down against the dollar and British pound.

In stock markets trading, London's benchmark FTSE 100 index rose 0.45 percent to stand at 6,709.32 points in late morning deals.

Frankfurt's DAX 30 grew 0.15 percent to 9,224.33 points and in Paris the CAC 40 advanced 0.73 percent to 4,233.34 compared with Friday's close.

Portugal's PSI 20 index gained also 0.73 percent to trade at 5,840.12 points in midday deals.

Madrid's IBEX 35 advanced 0.49 percent to 10,565.1 points after official data revealed that Spain's jobless queue shrank a little in July as the summer tourism season opened.

Portugal will inject 4.4 billion euros ($5.9 billion) into Banco Espirito Santo (BES), national bank governor Carlos Costa announced late Sunday, amid fears of a catastrophic bank run.

The bank will be split into two entities, with its toxic assets isolated and its healthier assets regrouped in a new Novo Banco, Costa said.

"Slightly supportive for European shares is the announcement that the Bank of Portugal has taken over control of Banco Espirito and submitted a rescue plan for Portugal's second biggest lender, removing uncertainty," said Markus Huber, senior analyst at brokers Peregrine & Black.

Banking shares rallied on the news, with BNP Paribas jumping 2.0 percent to 50.77 euros, Santander winning 1.0 percent to 7.48 euros and HSBC gaining 2.65 percent to 646 pence.

Investors brushed aside news of a drop in first-half profits at HSBC. The bank said earnings fell in the six months to the end of June because one-off gains were not repeated and after a weaker showing at its investment arm.

Meanwhile in foreign exchange trading on Monday, the euro dipped to $1.3427 from $1.3430 late in New York on Friday.

The European single currency eased to 79.79 pence from 79.82 pence on Friday. The pound rose to $1.6827 from $1.6817.

The European Central Bank and Bank of England both meet this week to set their respective interest rates.

On the London Bullion Market, the price of gold climbed to $1,294.34 an ounce from $1,291.25.

Asian stock markets ended mixed on Monday as traders reacted to Chinese data showing a recovery in the world's second-largest economy, as well as tracking the latest on Portugal and US jobs data from last Friday.

The Labor Department reported that the US economy added 209,000 jobs in July, down from June but maintaining the solid 200,000-plus monthly streak since February.

Wall Street's S&P 500 index posted its worst weekly loss in more than two years last week -- fuelled by debt concerns in Argentina according to traders.