European CDSs at monthly lows

A surge in market confidence lowered the cost of credit protection on a number of European banks to monthly lows in early trading today, as investors reacted positively to news of a eurozone financial rescue plan.

Five year credit default swap (CDS) spreads on Royal Bank of Scotland, which along with HBOS announced the departure of its chief executive and chairman yesterday, tightened to 85 basis points by 0930 BST today from 93.7bp at close of trading yesterday. The cost of protection on Lloyds TSB - still in talks to acquire HBOS - narrowed to 71.7bp from 80.2bp, according to credit information specialist CMA Datavision.

HBOS’ CDS spreads fell to 92.5bp at 0930 BST from 96.4bp yesterday, while the cost

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