LONDON, March 14 (Reuters) - An indicator of credit risk
in the euro area banking system leapt to its highest since
mid-July on Tuesday, reflecting the rising levels of investor
panic about contagion risk from the collapse of three U.S. banks
in under a week.
The so-called FRA-OIS spread , which measures
the gap between the euro zone three-month forward rate agreement
and the overnight index swap rate, jumped to as much as 21.08
basis points on Tuesday, the most since July 19 2022.
European banks have been clobbered in particular by the
collapse over the weekend of Silicon Valley Bank .
Although analysts say there is little risk of actual
contagion from SVB, the failure of the bank has raised doubts
among investors about the robustness of banks' balance sheets,
especially now interest rates are rising.
An index of European banking stocks has lost over
11% in value in the last three trading days alone, as banking
shares around the world have been battered.
(Reporting by Amanda Cooper; Editing by Alun John)
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