* FTSEurofirst 300 up 3 percent; hits six-week high
* Index trims gains after smaller-than-expected ECB rate cut
* Carmakers surge on signs of hope in sales figures
* Eyes on outcome of G20 meeting
By Blaise Robinson
PARIS, April 2 (Reuters) - European shares trimmed lofty
gains on Thursday after the European Central Bank's smaller than
expected rate cut, but remained up 3 percent, buoyed by renewed
hopes the global economy may be finding a floor.
The ECB cut its main refinancing rate by 25 basis points to
1.25 percent, while economists had widely expected a cut of 50
basis points.
"It doesn't make much of a change in the sense that rates
are already very low, but it sends the signal that they don't
mean business and continue to be behind the curve," said
Philippe Gijsels, strategist at Fortis in Brussels.
"Now it's not about rates but about buying bonds -- a cut of
only 25 basis points indicates that there is not much urgency,
and I don't think we'll see a statement on buying bonds."
At 1200 GMT, the FTSEurofirst 300 <> index of top
European shares was up 3 percent at 767.43 points, after gaining
as much as 4 percent earlier. The index is still down about 7
percent in 2009, but has surged nearly 20 percent since reaching
an all-time low on March 9.
Banking shares, which have been leading the market rally
over the past four weeks, climbed again on Thursday, with BNP
Paribas <BNPP.PA> up 8 percent, HSBC <HSBA.L> up 9.8 percent and
Deutsche Bank <DBKGn.DE> up 7.7 percent. The DJ Stoxx banking
index <.SX7P>, which has surged 58 percent since March 9, was up
6.1 percent on Thursday.
Automaker shares <.SXAP> jumped 8.6 percent after
encouraging U.S. March sales data as well as a sharp rise in new
car registrations in Germany.
BMW <BMWG.DE>, Fiat <FIA.MI>, Daimler <DAIGn.DE>, Renault
<RENA.PA> and Peugeot <PEUP.PA> were up 9-13 percent, while tyre
maker Michelin <MICP.PA> surged 14 percent after French
regulator AMF said U.S. fund Capital Research and Management
Company has boosted its stake in the company to 10.5 percent,
fuelling speculation on the fund's intentions.
LOW EXPECTIONS ON G20
But despite the strong gains on the market, a number of
analysts remained cautious ahead of key U.S. jobs data due on
Friday, expected to show no respite from the economic gloom.
"The first indications we have point to very bad jobs data
tomorrow that could be close to the bottom of the range on
economists' forecasts, i.e. between 700,000 and 750,000 jobs
gone," said Yann Lepape, economist at Oddo Securities in Paris.
"We're still in the middle of the storm. The risks are on
the downside, and the flow of negative news -- macro as well as
microeconomic -- is not about to dry up. The current rebound on
equity remains fragile and is mainly technical in our view," he
said.
Investors were keeping a close eye on the G20 meeting in
London, although there seemed little hope of seeing world
leaders agree on strong measures that could quickly revive the
recession-hit economy.
"A more substantial body of resolutions and communique than
the market is currently expecting could result in significant
volatility due to the surprise factor," said David Bakkegaard
Karsbol, Saxo Bank's chief economist.
"Otherwise, if things turn out as expected, i.e. no major
resolutions that offer immediate/substantial impact, markets
will turn their focus elsewhere as expectations surrounding the
summit have already largely been defused."
Around Europe, UK's FTSE 100 index <> was up 2.6
percent, Germany's DAX index <> up 4.3 percent and
France's CAC 40 <> up 3.7 percent.
Mining and steel stocks were among the biggest gainers,
rising along with buoyant metal prices. Rio Tinto <RIO.L> rose 8
percent and Xstrata <XTA.L> added 8.6 percent.
ArcelorMittal <ISPA.AS>, which said it had extended its
credit lines by $1.2 billion until 2012, bringing the total
amount of such refinancing to $6 billion, surged 10 percent.
(Additional reporting by Shankar Sitaraman in London; Editing
by Jon Loades-Carter)
