American shares of European banks made strong gains Tuesday after the Federal Reserve moved to counteract the credit crisis that has lead banks to write off billions of dollars in debt.
The Fed will temporarily allow banks to swap mortgage debt for safer bonds, making it easier for banks to raise cash. The news was a balm to the market and to financial stocks in particular, as banks have been selling bonds to pay off debt.
U.S. banks and financial institutions climbed on the news, and the Dow Jones industrial average rose 350 points. The Bank of New York Europe ADR index, which tracks stocks based overseas that trade on U.S. exchanges, gained 4.95 points, or 3 percent, to 167.93.
ADRs, or American Depositary Receipts, are securities that allow U.S. investors to trade shares of companies based overseas.
In afternoon trading, ADRs of Barclays Group PLC rose $2.78, or 8.3 percent, to $36.29, while another British bank, HSBC Holdings PLC, rose $3.58, or 4.7 percent, to $80.58.
Credit Suisse Group shares added $3.57, or 7.7 percent, to $50.12 in heavy trading, and another Zurich-based bank, UBS AG, gained $1.79, or 6.3 percent, to $30.13.
Also rising were ADRs of two Spanish banks. Banco Bilbao Vizcaya Argentaria advanced $1.39, or 7.1 percent, to $20.87, and shares of Banco Santander SA were up 92 cents, or 5.4 percent, to $18.11.
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