December 03, 2009

News that Bank of America will repay $45 billion in U.S. government aid is raising the spirits of the U.S. banking industry. Some of that good cheer may be spreading to Europe, too.On Thursday, European banking stocks are up strongly, besting the broader stock market. In the U.K., Barclays is up 3.76%, while Lloyds Banking Group has gained 4.5%. France’s Societe Generale SA has gained 2.5%, and Germany’s Commerzbank is up 2%. The pan-European Stoxx 600 Index, by contrast, is up only 0.77%.

This follows news on Wednesday that Bank of America has reached an agreement to repay $45 billion in federal bailout funds, which will allow it to escape pay restrictions and other curbs imposed by the U.S. government.Higher banking stocks are giving the broader European markets a boost, though observers say actual trading volumes are thin, which exaggerates any positive or negative news.