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Investors in European lenders are getting cold feet. Riding on a wave of optimism over the economic and earnings outlook, an index of the region’s banks rallied to a 15-month high in March -- before posting the second-biggest decline among industry groups this month. At the same time, bets for swings in lenders’ stocks have jumped, and options reached their highest prices since February 2016 relative to those for euro-area blue chips. There’s little doubt the environment for European banks has brightened, with profits forecast to grow at the fastest pace in three years in 2017 as quicker inflation fuels expectations for monetary tightening. Yet higher valuations are now unnerving invest... Full story

21 April