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LONDON, Jan 13 (Reuters) - Deutsche Bank andBarclays led a rally by European bank stocks on Mondayto their highest level for almost three years after regulatorswatered down new rules on leverage that aim to rein in riskybalance sheets.
Sunday's decision by the world's top central bankers wasaimed at trying to avoid crimping financing for the world'seconomy, and was seen as a positive for banks, especially thosewith big investment banking arms.
The STOXX Europe 600 Banking index was up 1.1percent at 204.6 points by 0820 GMT, after hitting 205.2, itshighest level since April 2011.
Shares in Deutsche Bank, Barclays and UBS wereeach up 2 percent.
"The significant regulatory forbearance - via reduction ofBasel leverage exposure - should go some way towards alleviatingconcerns on the leverage ratio, notably atBarclays and Deutsche Bank," Kinner Lakhani, analyst at Citi,said in a note.
The easing of the rule is the latest sign of how regulatorshave become more willing to accommodate banks as the focusswitches to helping economies recover.
The leverage ratio rules, due to come in from 2018, act as abackstop to a lender's core risk-weighted capital requirements.A ratio of 3 percent means a bank must hold capital equivalentto 3 percent of its total assets. (Reporting by Huw Jones and Steve Slater; Editing by LouiseHeavens)
