* FTSEurofirst 300 up 0.5 pct, highest close since November
* Energy shares gain with crude at $68 a barrel
* Porsche and VW fall on merger worries
By Brian Gorman
LONDON, July 27 (Reuters) - European shares advanced to
their highest close in more than eight months on Monday, as U.S.
data pointed to economic recovery and investors took the view
that the current earnings season will continue to be mostly
positive.
The FTSEurofirst 300 <> index of top European shares
rose 0.5 percent to 911.58 points, the highest close since Nov.
10, and the 10th session of gains in the last 11.
Energy shares rose as crude prices <CLc1> hovered just above
$68 a barrel, almost double the level of February, reflecting
greater economic confidence.
Index heavyweight BP <BP.L> closed 1.6 percent higher, ahead
of second-quarter results on Tuesday. ENI <ENI.MI>, Royal Dutch
Shell <RDSa.L> and StatoilHydro <STL.OL> gained between 1 and
2.1 percent.
The pan-European benchmark, which slumped 45 percent in 2008
due to the worst financial crisis since the Great Depression of
the 1930s, is up 41.2 percent from its lifetime low of March 9.
Sales of new single-family homes in the United States rose
more than expected in June, while the inventory of homes for
sale fell to a more than 11-year low, government data showed.
Sales rose to an annual rate of 384,000 in June, the
Commerce Department reported, up 11 percent from May, while the
number of new homes for sale fell to 281,000, the lowest since
February 1998. []
"The U.S. new home sales data was very positive and we
believe that we're seeing a base being formed in the U.S.
residential market," said Bob Parker, vice president of asset
management at Credit Suisse. "And it's important because we
shouldn't forget that the U.S. housing market was one of the
causes of the credit crunch."
He added: "We're not seeing widespread profit-taking.
Investors believe the rally is fairly durable and could last
until October. And there's a lot of cash sitting on the
sidelines."
Across Europe, Britain's FTSE 100 <> and France's
CAC-40 <> both rose 0.2 percent. Germany's DAX <>
rose 0.4 percent.
Wall Street was slightly lower as European bourses were
closing. The Dow Jones <>, S&P 500 <.SPX> and Nasdaq
Composite <> were down between 0.2 and 0.4 percent.
DEUTSCHE BANK <DBKGn.DE> RISES
Deutsche Bank rose 2.2 percent, ahead of second-quarter
results on Tuesday. "They should benefit from reduced writedowns
and bigger market share," said Credit Suisse's Parker. "I'm
assuning we're going to get a positive surprise."
Other banks on the rise included Banco Santander <SAN.MC>
and Lloyds <LLOY.L>, up 3.4 and 6.9 percent respectively.
According to Thomson Reuters data, of the 184 companies in
the S&P 500 that have reported earnings to date for the second
quarter of 2009, 77 percent have reported earnings above
analysts' expectations.
Volkswagen <VOWG.DE> fell 1.9 percent. The company is
considering a 4 billion euro ($5.7 billion) capital increase to
offset the credit rating impact of its merger with Porsche
<PSHG_p.DE>, Financial Times Deutschland reported.
A spokeswoman from Volkswagen declined to comment on the
report. []
Porsche fell 11.4 percent, as lingering questions over the
final shape of the luxury automaker's forced merger with VW and
the burden of its high debt level remain factors weighing on the
stock. []
Can maker Rexam <REX.L> ended the day 12.1 percent lower
after saying, following weekend press reports, that it is
contemplating raising new equity to avoid the risk of losing its
investment grade credit rating. The company will report its
first-half results on Thursday.
Irish budget airline Ryanair <RYA.I> fell 9.4 percent after
cutting full year profit forecasts due to falling yields
[]
Back in macroeconomic news, the Conference Board research
group's leading economic index (LEI) for the euro zone rose 1.5
percent to 95.9 points in June, suggesting the currency area's
economy may be bottoming out. []
(Additional reporting by Atul Prakash; Editing by Greg Mahlich)
