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European shares end higher; banks, miners advance

Published 06/24/2009, 12:47 PM
Updated 06/24/2009, 01:08 PM
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* FTSEurofirst 300 index closed 2.4 percent higher

* ECB tender boosts European shares

* Financials, miners gain

By Harpreet Bhal

LONDON, June 24 (Reuters) - European shares closed higher on Wednesday, led by financials, after the biggest-ever liquidity injection by the European Central Bank boosted hopes that the effort could help pull the euro zone economy out of a recession.

The FTSEurofirst 300 index of top shares ended 2.4 percent higher at 853.56 points, recovering from two straight sessions of losses. The index, which slumped 45 percent in 2008, has jumped 32 percent since hitting a record low in March.

The ECB lent banks 442.241 billion euros of one-year money at a fixed 1 percent rate, higher than the 300 billion euros forecasted by analysts in a Reuters poll

Banking stocks were among top gainers, with Barclays, BNP Paribas, Deutsche Bank, HSBC, Lloyds, Societe Generale and UBS climbing between 1.1 and 6.6 percent.

Miners were also higher, tracking gains in metals prices. Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources, Rio Tinto and Xstrata gained 3.3 to 10.1 percent.

Philippe Gijsels, senior equity strategist at Fortis Bank in Brussels, said the ECB's move was welcomed as it showed the central bank was ready to follow the U.S. Federal Reserve and the Bank of England in using non-conventional ways to stimulate the economy

"The market probably sees it as a small step in the right direction. It is a bit of a change in attitude and maybe the market is expecting that this is not the final thing. This is only the first step towards more EU quantitative easing," he said.

Energy majors were also in favour, as oil prices steadied around $69 a barrel. BG Group, BP, Total and StatoilHydro advanced between 0.3 and 1.8 percent, but Royal Dutch Shell edged down 0.3 percent.

Across Europe the FTSE 100 index was up 1.2 percent, Germany's DAX climbed 2.7 percent and France's CAC 40 was 2.2 percent higher.

FED IN FOCUS

Sentiment in the market was partly supported by an unexpected 1.8 percent rise in U.S. durable goods orders in May.

But bleak data showing a 0.6 percent fall in new single-family homes in May added to pessimism about the rate of economic recovery in the U.S.

The U.S. Federal Reserve is due to announce an interest rate decision later on Wednesday, and is seen keeping its benchmark short-term rate near zero.

Investors attention will be on whether the Fed might expand a $300 billion programme of Treasury purchases and signal how it might curtail its easy-money policy in the face of a recession.

Other gainers in Europe included tech stocks, which surged after U.S. peer Oracle reported quarterly earnings above expectations.

Infineon, Nokia and ASML climbed between 4 and 6 percent.

"We're seeing a bounce, helped in part by Oracle's results that were not as bad as they could have been," said Edmund Shing, strategist at BNP Paribas. (Additional reporting by Joanne Frearson and Blaise Robinson; Editing by Greg Mahlich)

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