As the prospect of a European version of the US's Troubled Asset Relief Programme gathers pace, analysts are beginning to ask: how can you trade around the potential for a recapitalisation of the European banking system and would it even solve the continent's problems?

The concept of a European Tarp first took hold in late August, when Christine Lagarde, head of the International Monetary Fund, said at the annual Jackson Hole meeting of central bankers that Europe's banks should be forced to raise more capital.