* FTSEurofirst 300 index rises 1.4 pct
* Banks gain ahead of FOMC decision
* Novartis falls as Q4 misses forecasts
By Joanne Frearson
LONDON, Jan 28 (Reuters) - Advances in banks and energy
stocks pushed European shares 1.4 percent higher in early trade
on Wednesday, placing them on track for a third successive day
of gains.
By 0932 GMT, the pan-European FTSEurofirst 300 <>
index of top European shares was up 1.4 percent at 796.64
points.
Investor focus was on the outcome of a U.S. Federal Reserve
meeting due at 1915 GMT. The central bank has already slashed
interest rates to nearly zero and is looking for other tools to
revive economic growth.
"There are some hopes the conclusion of the FOMC meeting
this evening is going to give us further details on what is
happening with U.S. quantitative easing and what ever plans
there may be for the proposed bad bank," said Jim Wood-Smith,
head of research at Williams de Broe.
Banks were the biggest gainers on the index. Lloyds Banking
Group <LLOY.L> soared 27.4 percent as Citigroup said the risk of
nationalisation of the group is fully factored into the share
price.
BNP Paribas <BNPP.PA> was 10.7 percent higher following news
that Fortis Holding had reopened talks with the Belgian
government and BNP Paribas over the sale of Fortis <FOR.BR>
assets after a panel of experts recommended doing so.
HSBC <HSBA.L>, UBS <UBSN.VX>, Credit Suisse <CSGN.VX> and
Banco Santander <SAN.MC> were up 2.9-6.5 percent.
"There is also short position closing in financials. Since
the lifting of the short ban particularly in the UK there have
been some substantial short positions taken out which are now
being squeezed," said Wood-Smith.
"The statement from Barclays <BARC.L> on Monday appears to
be the trigger for a lot of investors to say this trend looks
like it's going as far as it's going to for the time being and
we need to get out of here. The more the price goes up investors
have to close their shorts," he added.
Barclays said on Monday it did not need to raise fresh
capital and that it had got off to a good start in 2009.
Insurers were also big gainers on the index. Axa <AXAF.PA>,
Allianz <ALVG.DE> and Munich Re <MUVGn.DE> were up 2.1-4.2
percent.
Across Europe, the FTSE 100 <> index was up 1.2
percent, Germany's DAX <> was 2.2 percent higher and
France's CAC 40 <> was up 1.8 percent.
OILS UP; DRUGMAKERS, MINERS FALL
Energy stocks rose as crude <CLc1> rebounded above $42 a
barrel on Wednesday from a 9 percent fall on Tuesday as worries
over demand due to the faltering global economy eased.
Total <TOTF.PA>, BP <BP.L> and Shell <RDSa.AS> were 0.4-1.4
percent higher.
German software giant SAP <SAPG.DE> soared 6.3 percent as
its profit beat expectations and software and software-related
services revenues were in-line with consensus figures.
[]
On the downside, pharmaceutical makers were the main drag on
the index. Swiss drugmaker Novartis <NOVN.VX> fell 4 percent
after the group's fourth-quarter results missed forecasts as the
strong dollar weighed. []
"Quite a negative surprise due to higher than expected
negative currency effects. Guidance for fiscal 2009 is in line
with expectations," said DZ Bank analyst Thomas Maul. "Traders
should take profits today and value investors stick to the
stock."
Miners were on the back foot. Rio Tinto <RIO.L> fell 3.5
percent after the group conceded equity raising was one option
being considered following persistent rumours it might need to
sell shares to help pay off $39 billion in debt. []
Antofagasta <ANTO.L>, Eurasian <ENRC.L>, Vedanta <VED.L> and
Xstrata <XTA.L> were down 1.9-6.3 percent.
(Editing by Jon Loades-Carter)
