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No Relief for European Stocks as Bank Selloff Continues

March 13 (Reuters) - European stocks fell on Monday as bank stocks continued to tumble in the region even as authorities stepped in to cap the fallout from the sudden collapse of Silicon Valley Bank (SVB).

The pan-European STOXX 600 index fell 0.6% by 0812 GMT, having closed at a more-than-five-week low on Friday.

However, Wall Street futures rallied after the Federal Reserve and U.S. Treasury announced a range of measures to stabilise the banking system and said depositors at SVB would have access to their deposits on Monday.

European banking stocks dropped 1.1%, after their worst two-day selloff in more than five months, on worries about the resilience of the sector's balance sheet in the face of SVB's collapse and the interest rate outlook.

Investors now see a nearly 90% chance that the Fed will hike interest rates by 25 basis points (bps) next week, a drastic change from the 50-bps hike they had priced in previously following strong economic data.

Goldman Sachs said on Sunday it expects no rate hike in light of the recent stress in the financial sector.

Meanwhile, the European Central Bank is set to hike rates by 50 bps later this week.

HSBC slipped 0.1% after the British bank said it is acquiring the UK subsidiary of SVB for 1 pound, rescuing a key lender for technology start-ups in Britain.

Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D'Souza

Source: Reuters

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