Barclays Share News (BARC)

(Updates throughout with additional details and comments.) By Shara Tibken and Marshall Eckblad Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--U.S.-listed shares of European banks rallied on Friday, led by Irish and Spanish lenders, after regionwide stress tests showed most banks could withstand an economic downturn or government-bond crisis. The stress tests, intended to restore trust in the European banking system, showed most of the 91 banks scrutinized by the European Union's Committee of European Banking Supervisors passed with flying colors. Only seven banks--five from Spain, one from Germany and one from Greece--would need to raise new capital to fortify their finances and weather potential tough conditions. The Bank of New York index of American depositary receipts, which encompasses U.S.-traded securities of foreign companies, ended up 0.75% at 124.73, while the bank's index of European ADRs rose 0.71% to 114.27. Both indexes initially slipped into the red following the stress test results but rebounded as the broader U.S. markets also moved higher. The Dow Jones Industrial Average finished up 102.32 points, or 1%, at 10424.62. While the credibility of the stress tests and nearly blanket positive results are already being questioned, stock market investors welcomed the fact that the results met expectations. "What can be said is that (the) stress test release does not appear to have uncovered any 'skeletons in the closet'," noted Chris Turner, head of foreign exchange Strategy at ING Commercial Banking. Shares of Ireland's biggest banks, Bank of Ireland (IRE) and Allied Irish Banks PLC (AIB, ALBK.DB), were among the most actively traded of the European banks, after both passed. Bank of Ireland rose 3.8% to $4.08 and Allied Irish Banks climbed 4.5% to $2.55. Ireland had been closely watched, as its economy is under more duress than most of its neighbors. "Of all the European banks, the Irish banks were...closest to the gray area, where it wasn't 100 percent certain that they'd pass," said Erin Davis, a senior equity analyst who covers Irish banks for Morningstar Inc. "The losses that those banks are going to take in the future are likely to be heavier than" banks in Germany and France, she said. The rally came as the stress tests delivered more information to investors than they had expected, especially on banks' holdings of sovereign debt, said Antonio Ramirez, head of the banks equity research team in Europe at Keefe, Bruyette & Woods. Initially, investors expected regulators would only test banks' trading books against their holdings of sovereign debt, and not even disclose long-term holdings. Instead, Ramirez said investors have gotten total holdings of sovereign debts for banks in France, Spain, the U.K., Italy, and some in Germany. Regulators didn't actually stress-test those holdings, but provided enough data for investors to make their own assessments. U.S.-listed Spanish banks also moved higher after initially falling after the stress test results. Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC) rose 1.5% to $12.78 and Banco Santander SA (STD, SAN.MC) increased 2.6% to $13.29. All of Spain's listed banks passed the test but five smaller savings banks will have to raise more capital. Industry and government officials in Greece, Spain and Germany hinted this week that major banks in their countries would come through the tests without trouble. A Goldman Sachs survey released Thursday showed market watchers expected 89% of banks would pass the tests, with banks based in Spain, Germany and Greece expected to raise the most new capital. Survey participants expected 10 of the 91 banks would fail the tests. Deutsche Bank AG (DB, DBK.XE) shares ended up 27 cents at $64.54, while Commerzbank AG (CRZBY, CBK.XE) closed up 5 cents at $8.20 on light volume. All but one of the 14 German banks that participated in the stress tests passed, with government-owned Hypo Real Estate Holding AG failing. Among the U.K. banks, shares in Royal Bank of Scotland Group PLC (RBS, RBS.LN) were up 4.2% to $14.24, while shares in Barclays PLC (BCS, BARC.LN), HSBC Holdings PLC (HBC, 0005.HK, HSBA.LN) and Lloyds Banking Group PLC (LYG, LLOY.LN) were all higher. All of the U.K. banks passed the tests. Shares in France's BNP Paribas SA (BNPQY, BNP.FR) and Societe Generale SA (SCGLY, GLE.FR) were also up over 1%. Greek banks ended mixed with National Bank of Greece SA (NBG, ETE.AT) falling 1.1% to $2.80, but Alpha Bank AE (ALBKY, ALPHA.AT) rising 1.8% to $1.70. Greece's state-owned ATEBank (ATE.AT) failed the stress-test and said it would need to raise EUR242.6 million in new capital. Meanwhile, Switzerland's banking regulator Friday endorsed Swiss giants UBS AG (UBS, UBSN.VX) and Credit Suisse Group (CS, CSGN.VX) as strong enough to withstand further shocks such as a global recession coupled with a financial-markets and real-estate slump, while the Swiss National Bank urged the two to keep trimming their leverage ratios and improve their capital. UBS slipped 4 cents to $14.90, while Credit Suisse rose 1.3% to $42.69. -By Shara Tibken and Marshall Eckblad, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com (Caitlin Nish contributed to this article.) (END) Dow Jones Newswires July 23, 2010 16:50 ET (20:50 GMT)