June 6 Reuters Shares of U.S. banks regained some footing on Tuesday, with one of the top regional banking indexes hitting its highest in nearly seven weeks, as investors shrugged off reports of tighter capital requirements for banks.

The tenuous relief rally comes at a difficult time for a banking sector that has been grappling with worries around deposit flight, rising interest rates and exposure to commercial real estate since March.

The KBW Regional Banking Index extended gains to hit its highest since midApril. It was last up 5.2. The SP 500 Banks index advanced 1.7. In comparison, the benchmark SP 500 index was last up marginally.

Wall Street39;s main indexes also rose on Tuesday on the back of a banksled rally in economically sensitive sectors.

Big banks such as Wells Fargo, Goldman Sachs, Morgan Stanley, Citigroup and Bank of America rose between 1.6 and 2.8.

Regional lenders were also higher, with PacWest Bancorp, Western Alliance, Zions Bancorp, Comerica, Truist Financial and KeyCorp rising between 4.4 and 7.

Shortsellers will see a combined 145.7 million in paper losses from the gains in shares of the six regional lenders on Tuesday, data from analytics firm Ortex showed.

Our baseline does not anticipate a further intensification of banking stresses, analysts at Deutsche Bank wrote in a client note on Monday.

Fed fund futures indicate traders have priced in a near 80 chance the U.S. central bank will hold interest rates in the 55.25 range, according…