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Positive broker comment helped UniCredit accelerate its recovery on Thursday, with the Italian lender leading the FTSE Eurofirst 300.

UniCredit jumped 13.5 per cent to €2.90, after Natixis and Citi both upgraded the stock to “buy”, with a target price of €4. The Italian lender is up 27.1 per cent from its Monday close.

“There is less downside risk at the moment,” said Azzurra Guelfi, analyst at Citi. “While it is still a risky call, the underperformance of the stock has been too much compared to [UniCredit’s] fundamental deterioration and we see upside from potential restructuring.”

‪”We highlight the risk of volatility around the share price due to the capital increase. Longer-term risks are the macroeconomic sovereign conditions deteriorating further. UniCredit has €40bn of sovereign exposure to Italy‬.”

Mediobanca, one of the lead underwriters on UniCredit’s rights issue, also rose 8.1 per cent to €4.29, as fears that the cash call may fail lessened. The FTSE MIB outperformed its peers, gaining 2.1 per cent to 15,192.79.

Banks across Europe were boosted by UniCredit’s gains, with the FTSE Eurofirst 300 banks index adding 0.9 per cent to 364.38 as sector sentiment improved. The eurozone’s larger lenders were among the best performers, with BNP Paribas up 3.4 per cent at €31.01, and Deutsche Bank rising 2 per cent to €28.51.

A strong Spanish bond auction helped the FTSE Eurofirst 300 hit a five-month high in early afternoon, but the release of weak economic data from the US pushed Europe’s blue-chip down 0.3 per cent to 1,018.78.

European retailers led the index down, with Belgium retail group Delhaize slumping by 10.8 per cent to €41.78, after disappointing fourth-quarter sales. Carrefour slipped 0.7 per cent to €16.63, while Europe’s second-largest retailer by revenues, Metro, fell 2.9 per cent to €27.55.

In Paris, the CAC 40 index slipped 0.2 per cent to 3,199.98. Danone slipped 1.7 per cent to 47.56 as Société Générale cut its target price for the French food group to €45 from €50.

Peugeot rose 4.6 per cent to €13.54 after it announced strong sales growth in China, Russia and Latin America, broadly offsetting a drop in European volume.

In Frankfurt, the Xetra Dax enjoyed its highest close since October, after it rose 0.4 per cent to 6,179.21. Commerzbank led the index as it gained for the third consecutive session, adding 5.8 per cent to €1.37.

Madrid’s blue-chip Ibex 35 was flat at 8,427.0.

Copyright The Financial Times Limited 2017. All rights reserved.
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