Financials lead Europe shares up after Fed move

                                
* FTSEurofirst 300 <.FTEU3> rises 0.9 percent
                                
 * Banks surge after Fed buys Treasuries
                                
 * Prudential profits boost insurers
                                
 
                                
 By Brian Gorman
                                
 LONDON, March 19 (Reuters) - European shares rose in early
trade on Thursday, after the Federal Reserve unveiled its first
large-scale purchase of Treasury bonds in four decades to try to
revive the U.S. economy.
                                
 At 0936 GMT, the FTSEurofirst 300 <.FTEU3> index of leading
European shares was up 0.9 percent at 717.45 points. 
                                
 "The Fed's move is a major positive for financials," said
Bernard McAlinden, strategist at NCB Stockbrokers in Dublin.
"But with the dollar weaker, and the euro stronger, you've got a
negative impact for the likes of autos."
                                
 Banks were among the major gainers. BNP Paribas <BNPP.PA>,
Banco Santander <SAN.MC>, Barclays <BARC.L>, Credit Suisse
<CSGN.VX>, UBS <UBSN.VX> <UBS.N> and UniCredit <CRDI.MI> rose
between 4 and 10.5 percent. 
                                
 UBS Was also boosted by announcing it would spend up to 1
billion euros buying back bonds. [ID:nLJ366015]
                                
 But HSBC <HSBA.L> fell 2.3 percent, amid its 12.5 billion
pounds rights issue. HSBC rights shares will begin trading in
London on Friday. 
                                
 British insurer Prudential <PRU.L> rose as much as 12
percent after beating forecasts by reporting a 17 percent rise
in annual profit, boosted by growth in its Asia operations. The
company also announced the departure of its chief executive Mark
Tucker. [ID:nLI94109]
                                
  Allianz <ALVG.DE>, Aviva <AV.L>, AXA <AXAF.PA>, Generali
<GASI.MI>, Legal & General <LGEN.L> and Zurich Financial
<ZURN.VX> were up between 3.2 and 8 percent.
 French luxury goods group Hermes <HRMS.PA> rose 5.1 percent
after it said early-year trading was in line with its target of
stable sales for the year as it posted 2008 profits up on a year
earlier and ahead of forecasts. [ID:nLJ961906]
                                
Across Europe, Britain's FTSE 100 <.FTSE>, Germany's DAX
<.GDAXI> and France's CAC-40 <.FCHI> were up between 0.5 and 1.3
percent. 
                                
 
                                
 PHARMAS FALL
                                
 Drugmakers were mostly lower as investors sold the
traditionally defensive sector. GlaxoSmithKline <GSK.L>,
Novartis <NOVN.VX>,  Sanofi-Aventis <SASY.PA> and Novo Nordisk
<NOVOb.CO> fell between 0.6 and 5 percent. 
                                
  Oils were mixed, with crude prices <CLc1> of $49 a barrel
offset by Morgan Stanley cutting its view on the European oil
and gas sector to "in-line" from "attractive". BP <BP.L> fell
0.6 percent after Morgan Stanley cut its price target to 550
pence from 650 pence.
                                
 The FTSEurofirst 300 has risen more than 11 percent since
hitting a lifetime low last week, but is still down more than 13
percent in 2009, hurt by a banking crisis that has helped to tip
several major economies into recession.
                                
 The Dow Jones <.DJI>, S&P 500 <.SPX> and Nasdaq Composite
<.IXIC> finished between 1.2 and 2.1 percent higher on
Wednesday.
                                
  Shares of financial companies shot higher as investors
bet that the plan, announced at the end of a two-day meeting of
policymakers, would ease borrowing costs.
                                
 Citigroup <C.N> and Bank of America <BAC.N> both rose more
than 22 percent.
                                
 With interest rates about as low as they can go in countries
such as the UK and the U.S., policymakers have turned to
alternative measures such as quantitative easing to combat
recession.
                                
 However, the European Central Bank still has room to cut
interest rates and there is no specific lower limit, ECB
Governing Council member Guy Quaden said in a magazine interview
published on Thursday.
                                
 "Unlike other central banks, we have not completely used our
room for manoeuvre on interest rates. We still have
possibilities to act in that area," Quaden told Belgium's
Trends/Tendances magazine.
                                
 Economists expect the ECB to cut its main refinancing rate
to 1 percent by mid-year, but no further. [ID:nLAG003293]
 (Editing by Hans Peters)