Dexia agreed to sell its Belgian banking retail operations to the Belgian government for 4 billion euros ($5.4 billion) in order to prevent the Belgian-French financial institution from going bankrupt. Dexia had recently lost access to short-term funding because of concerns over its debt holdings of troubled eurozone countries.

How can investors profit from this news?

By taking on the banks' risk, governments like France, Belgium and Luxembourg could see their credit ratings downgraded and their borrowing costs rise. If there are any more European banks that find themselves in the same situation as Dexia, it could spell trouble for the future of the euro. If this scenario plays out, the ProShares UltraShort Euro (EUO) and the Market Vectors Double Short Euro (DRR) ETFs could climb as the euro falls.

On the other hand, investors who see the news of the Dexia rescue as a sign that eurozone leaders are taking proactive steps to prevent the European financial system from collapsing might want to take a look at the iShares MSCI Europe Financials (EUFN) ETF. European financial stocks have already fallen considerably this year, so intervention on the part of European governments might be enough to stop share prices from falling much further. Once the outlook in Europe improves, financial stocks could see the biggest gains.

Optimistic investors could also buy individual European banking stocks that trade on exchanges as ADRs, like Banco Santander (STD), Credit Suisse Group (CS) and Deutsche Bank (DB). While there's more risk in buying individual banking stocks, there's also more potential upside than buying a basket of European financial stocks provides.

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