PARIS (AP) -- BNP Paribas' share price surged following early losses Tuesday after the French bank vehemently denied reports that it was struggling to secure dollar funding amid concerns that European banks aren't able to weather the continent's debt crisis.European banks -- many of which hold substantial amounts of Greek and other risky bonds -- have borne the brunt of investor fears over recent days that Greece might not receive the next installment of its bailout loans and could be forced to default. That would leave the banks holding a substantial amount of debt that may never be repaid.An opinion piece in The Wall Street Journal on Tuesday shone the spotlight on BNP Paribas, quoting an unnamed executive as saying the bank was unable to borrow from U.S. money market funds.That prompted a plunge in BNP's share price, dragging it down to euro23.05 ($31.48), and continuing a trend of bad sessions.But BNP's ensuing denial helped its shares rebound in the early afternoon, and they continued to move upward as markets derived some reassurance from a statement by German Chancellor Angela Merkel, who indicated that Greece was making progress in meeting the demands of international creditors.BNP finished the day up 7.2 percent at euro28.00."BNP Paribas categorically denies the statements made by this anonymous source and confirms that it is fully able to obtain dollar funding in the normal course of business," the bank said in a statement.It said it was increasing currency swaps to offset a pullback from U.S. funds, but also noted it was still able to get money from those sources.Pressing its denial, BNP later asked the French market regulator to investigate the publication of "erroneous information about its funding in dollars."The accusation and denial followed a familiar pattern from recent weeks.Last month, bank shares nose-dived after the European Central Bank said one had paid above-market rates to borrow $500 million a day for seven days. It didn't name the bank, but analysts said the situation is so precarious that fears about one bank were enough to taint the whole industry.BNP's denial also echoed one from its competitor Societe Generale a day earlier.On Monday, CEO Frederic Oudea held a last-minute call with reporters to describe how Societe Generale was speeding up plans to raise more money to give it a bigger cushion to deal with the current market turbulence.Oudea emphasized over and over that Societe Generale's exposure to Greek debt was a small fraction of its overall balance sheet and that it could withstand even a very substantial writedown on those bonds.This week French banks are also dealing with the threat of a downgrade from Moody's.The ratings agency said in late June that it was considering the move and the assessment takes three months, and so could arrive any day. Oudea of Societe Generale said Monday that even if its rating dropped, it wouldn't change the bank's outlook.With so much uncertainty over how bad the Europe's debt crisis is and whether leaders are going to be able to manage it, markets have been exceptionally volatile recently. That has mostly meant down days for European banks, but occasionally they surge on hopes that a resolution is at hand.On Tuesday, two other major French banks, Societe Generale and Credit Agricole, also rode the new optimism, moving up 15 and 6.7 percent, respectively.
- BNP Paribas