* FTSEurofirst 300 rises 1.9 pct, up 3.3 pct on the week
* Mining shares jump as metal prices rally
* Banking stocks rise as report of Lehman bid reassures
By Blaise Robinson
PARIS, Sept 12 (Reuters) - European stocks ended higher on
Friday, snapping a three-session losing streak as buoyant metal
prices sparked a strong rally in mining shares, while energy
stocks gained ground as oil prices rose.
The FTSEurofirst 300 <> index of top European shares
closed 1.9 percent higher at 1,162.15 points.
The index gained 3.3 percent during the roller-coaster week
that started with a sharp jump on Monday following the
announcement of the rescue by the U.S. government of embattled
mortgage firms Fannie Mae <FNM.N> and Freddie Mac <FRE.N>.
London Metal Exchange copper, tin, nickel, lead and zinc
jumped between 3 and 6 percent on Friday as traders cited short
covering. A soft dollar against the euro <EUR=> also helped to
push prices higher.
Rio Tinto <RIO.L>, Xstrata <XTA.L>, BHP Billiton <BLT.L> and
Anglo American <AAL.L> soared between 7.3 percent and 8.4
percent.
Energy shares were also among the biggest gainers as oil
prices rose, on worries over the potential impact of Hurricane
Ike. Total <TOTF.PA> rose 2.2 percent and BP <BP.L> added 1.6
percent.
Strong consumer sentiment data also fuelled the market's
rally. The Reuters/University of Michigan sentiment index jumped
to 73.1 in September from 63.0, and was far above the consensus
forecast of 64.0.
"Stocks are still moving in a tight range, they have been
bouncing between the same levels for a few weeks now," said Yann
Lepape, chief global macro strategist at Oddo Securities, in
Paris.
"But the adjustment to the macroeconomic outlook has still
to be done. In the U.S., the real consumer recession hasn't
really started yet and in the euro zone, we just recently tipped
our toes into recession. These factors make me think that stocks
will revisit their lows."
Investors' enthusiasm on Friday was limited by data that
showed weaker-than-expected U.S. monthly sales that rekindled
concerns over consumer spending.
U.S. retail sales dropped 0.3 percent in August after a
sharply revised 0.5 percent drop in July that previously was
reported as only a 0.1 percent decline.
"(The figure) backs expectations for a stagnation or even
a contraction in real consumption in the third quarter,"
Jean-Marc Lucas, economist at BNP Paribas in Paris, wrote in a
note.
"The dissipation of the fiscal package impact and the clear
upward trend in unemployment are now affecting household
consumption. These negative factors should be only partly offset
by the expected moderation in inflation and the possibility for
households to use savings."
LEHMAN HOPES
Banking stocks gained ground on rising hopes for a bid for
troubled Wall Street firm Lehman Brothers <LEH.N>.
The Financial Times said on Friday, citing people familiar
with the matter, that Bank of America Corp <BAC.N>, JC Flowers &
Co, and the Chinese sovereign wealth fund China Investment Co
were considering a possible joint bid for Lehman.
Barclays <BARC.L> gained 3.6 percent, Credit Suisse
<CSGN.VX> rose 3.2 percent and Societe Generale <SOGN.PA> added
1.8 percent.
Around Europe, Germany's DAX index <> gained 0.9
percent, UK's FTSE 100 index <> rose 1.9 percent and
France's CAC 40 <> added 2 percent.
Deutsche Postbank <DPBGn.DE> tumbled 6.3 percent after
Deutsche Post <DPWGn.DE> sold a big stake in the bank to
Deutsche Bank <DBKGn.DE>, amid what traders said was confusion
about the structure of the deal.
French steel tube maker Vallourec <VLLP.PA> surged 7.9
percent, propelled by the rally in commodity-related stocks as
well as by an upgrade by Societe Generale to "buy" from "sell".
(Editing by Sue Thomas)
