By Amanda Cooper
LONDON, May 16 (Reuters) - European shares rose on Friday,
fed by a rally in energy stocks as crude oil hit new record
highs, although banks coming under pressure and U.S. consumer
sentiment data knocked the market back from session peaks.
Crude oil futures <CLc1> hitting a high just shy of $128 a
barrel drove up the oil and gas sector in Europe, pushing up
shares in Total <TOTF.PA>, BP <BP.L> and Royal Dutch Shell
<RDSa.AS> by 1.5 to 2.5 percent, making them the three largest
positive influences on the broader market.
Shares in the UK's biggest electricity producer, British
Energy <BGY.L>, rose 5.2 percent after the company said it had
received early stage takeover proposals.
Pharmaceuticals put on a strong performance, with France's
Sanofi-Aventis <SASY.PA> rising 2.2 percent after investors
welcomed positive clinical trial results for its heart drug
Multaq.
A decline in bank stocks took some of the lustre off the
index, particularly as U.S. stocks slipped into the red.
The FTSEurofirst 300 <> index of top European shares
rose 0.4 percent to 1,365.2 points, after earlier rising by as
much as 1.2 percent to four-month highs. Data showing U.S.
consumer confidence data hit its worst level in nearly 28 years
stripped the market of many of the day's gains.
But the index still gained 1.5 percent this week, helped by
fairly robust earnings as well as U.S. data that showed
inflation moderating and consumer spending holding up.
"In general terms, the data specifically coming out of the
United States has certainly been supportive, despite the fact
that we had disappointing consumer confidence numbers today,"
said Barclays Stockbrokers strategist Henk Potts.
"There is also relief that the corporate data hasn't really
been as bad as people feared, so the combination of those two
concepts has added to investor confidence over the last couple
of weeks."
BA RISES
British Airways <BAY.L> rose by as much as 7.8 percent after
announcing its first dividend since 2001 and posting a 45
percent rise in annual profits. Its stock ended up 4 percent,
while German rival Lufthansa <LHAG.DE> rose 2 percent.
The FTSEurofirst is on course for a 1.9 percent gain in May,
after rising 6 percent in April and recovering 14 percent since
hitting 2-1/2 year lows in mid-March.
"It looks as if a recovery is setting in -- emerging markets
are strong, Europe is strong and after the huge amount of worry
and panic, it's not as bad as people thought it would be," said
Mark Bon, a fund manager at Canada Life.
"The flight to defensives and large caps and the sell-off in
emerging markets might all be overdone."
Britain's FTSE <> rose 0.8 percent, Germany's DAX
<> rose 1.1 percent and France's CAC <> gained 0.4
percent.
Banks were the worst drag on the European market. Royal Bank
of Scotland <RBS.L> lost 3.4 percent, while UBS <UBSN.VX> fell
1.7 percent, Barclays <BARC.L> shed 2 percent and BNP Paribas
<BNPP.PA> lost 0.8 percent.
Banks accounted for a net 1.2 points worth of decline in the
FTSEurofirst 300, compared with the positive contribution of a
net 3.3 points from the oil and gas sector.
Shares in the London Stock Exchange <LSE.L> rose 5.1 percent
to rank among top percentage gainers on the FTSE 100 on market
talk of bid interest after Sanford Bernstein said a fall in the
exchange's share price had made the British bourse an affordable
target for rivals Nasdaq <NDAQ.O> and NYSE Euronext <NYX.N>.
Technology stocks were stronger, tracking their U.S. peers,
which rose on a battle to control Yahoo <YHOO.O>. Nokia
<NOK1V.HE> and Siemens <SIEGn.DE> rose 1.8 to 2.3 percent.
The FTSEurofirst has lost 10 percent so far this year,
punctured by banks' multibillion dollar writedowns as a result
of the credit market crisis, but analysts say a turning point
could be at hand.
"We're unlikely to get to last year's highs, but we should
make some money this year," said Canada Life's Bon.
(Additional reporting by Sitaraman Shankar; editing by Sue
Thomas)
