* FTSEurofirst 300 jumps 3.2 percent
* Financial stocks rally as sentiment improves
* Automakers, energy shares advance
By Atul Prakash
LONDON, Jan 28 (Reuters) - European shares ended higher for
a third straight session on Wednesday as a 50 percent surge in
Lloyds Banking Group <LLOY.L> boosted the financial sector that
has struggled due to heavy toxic debt and massive writedowns.
Optimism that the new U.S. administration was moving quickly
to stabilise the ailing banking sector and Wells Fargo's <WFC.N>
announcement that it was maintaining its dividend and did not
need more taxpayer funds also improved sentiment, analysts said.
The pan-European FTSEurofirst 300 <> index ended 3.2
percent higher at 810.82 points, but is still down 2.6 percent
this year after plunging 45 percent in 2008 on a credit crisis
and an economic slowdown that threatens to become a slump.
"The greater transparency that we have seen from the banking
sector in the course of the last few trading sessions alleviated
some of the worst fears in the market and allowed the sector to
rally," said Henk Potts, strategist at Barclays Stockbrokers.
British bank Barclays <BARC.L> helped the banking sector
revival this week by saying that it had no need to raise capital
and remained profitable despite an 8 billion pound ($11 billion)
2008 writedown. Its shares jumped 18.9 percent on Wednesday and
have more than doubled this week.
Lloyds shares spiked as Citi analyst Tom Rayner said a full
nationalisation of the bank would be "unnecessary and
inconsistent with the stated aim of government," and upgraded
his stance on the shares to "buy".
Royal Bank of Scotland <RBS.L> jumped 35.7 percent, BNP
Paribas <BNPP.PA> climbed 20.8 percent and Deutsche Bank
<DBKGn.DE> rose 22 percent. Fortis <FOR.BR> was up 12.8 percent
after the bank said it had reopened talks with the Belgian
government and BNP over the asset sales.
Investors awaited a statement from the U.S. Federal
Reserve's monetary policy-setting Federal Open Market Committee
later on Wednesday.
"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 whatever plans there
may be for the proposed bad bank," said Jim Wood-Smith, head of
research at Williams de Broe.
Across Europe, the FTSE 100 index <>, Germany's DAX
<> and France's CAC 40 <> were up 2.4-4.5 percent.
VOLATILITY TO CONTINUE
In the latest sign in recent days that households and
financial markets may be developing some resilience to the
crisis, surveys showed consumers in France and Germany shrugging
off some of their pessimism while investors looked past the
widespread business gloom to buy shares. []
But the International Monetary Fund underlined the scale of
the global economic crisis, saying it risked running out of
money, while investors awaited the U.S. central bank's latest
efforts to get credit flowing.
"Undoubtedly, the first quarter of this year is going to be
volatile. We continue to recommend that investors stay defensive
and invest in large-cap stocks that have strong, reliable
earnings streams," said Potts of Barclays Stockbrokers.
Among other sectors, energy shares were also higher, with
OMV <OMVV.VI> jumping 8.9 percent, Repsol <REP.MC> up 1.9
percent, Total SA <TOTF.PA> rising 2.4 percent and gas producer
BG Group <BG.L> gaining 2.9 percent.
Miners were mixed. Rio Tinto <RIO.L> fell 1.5 percent after
the group confirmed it may issue shares to help pay off $39
billion in debt and analysts said heavily indebted rival Xstrata
<XTA.L> might have to do the same.
Xstrata <XTA.L> slumped 9 percent, but several other miners
were up. BHP Billiton <BLT.L>, Anglo American <AAL.L>, Kazakhmys
<KAZ.L> and Antofagasta <ANTO.L> rose 2-5.5 percent.
Automakers were higher as Renault <RENA.PA> gained 12.5
percent, Volkswagen AG <VOWG_p.DE> was up 9.2 percent and
Peugeot <PEUP.PA> rose 10.4 percent.
German software giant SAP <SAPG.DE> rose 5.3 percent as its
profit beat expectations, and software and software-related
services revenues were in-line with consensus figures.
(Additional reporting by Brian Gorman and Joanne Frearson;
editing by Elaine Hardcastle)
