European shares race higher; commods, banks lead

                                
 * FTSEurofirst 300 closes 4.3 pct higher
                                
 * Commodities shares jump, tracking crude, metals prices
                                
 * Banks advance on hopes credit crisis will ease
                                
 
                                
 By Atul Prakash
                                
 LONDON, Nov 4 (Reuters) - European shares closed sharply
higher on Tuesday, registering gains for a sixth straight day,
as commodities stocks tracked stronger crude and metals prices,
and banks rose on hopes the credit sector jitters may ease.
                                
 Expectations that the European Central Bank and the Bank of
England will cut interest rates sharply this week after
Australia did so on Tuesday also lifted sentiment ahead of the
U.S. Presidential vote.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed 4.3 percent higher at 974.15 points, though the benchmark
index is still down about 35 percent this year.
                                
 Commodities shares led the advance, as crude oil prices
surged about 11 percent after industry sources said Saudi Arabia
had already made substantial cuts in crude supplies, while
copper jumped 6 percent and aluminium gained 2.8 percent.
                                
 BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group
<BG.L> and Tullow Oil <TLW.L> added between 1.8 and 8.4 percent.
                                
 Banking shares also moved higher, with investors hoping that
the credit markets would get a new lease of life after recent
coordinated measures by the governments and expectations of
further rates cuts in Europe this week.
                                
 "The European banking sector will be keenly watched, as they
have been hard hit, which would suggest that any recovery in the
economy will impact positively on the sector," Chris Hossain,
senior sales manager at ODL Securities, said.
                                
 "The European banks have been offered olive branches by the
various governments, and it is encouraging to see that banks are
swallowing their pride and going cap in hand and asking for
funds," he added.
                                
 Societe Generale <SOGN.PA> advanced 11.2 percent, BNP
Paribas <BNPP.PA> added 5.6 percent, HBOS <HBOS.L> surged 10.1
percent and Barclays <BARC.L> was up 8.4 percent.
                                
 Across Europe, Britain's FTSE 100 <.FTSE> rose 4.4 percent,
Germany's DAX <.GDAXI> gained 5 percent and France's CAC <.FCHI>
rose 4.6 percent.
                                
 
                                
 FOCUS ON U.S. ELECTIONS
                                
 Investors kept a close eye on the U.S. presidential
election, as the result may offer some relief with the prospect
of more fiscal stimulus.
                                
 Democrat Barack Obama and Republican John McCain faced the
verdict of U.S. voters after a long and bitter struggle for the
White House, with Obama holding a decisive edge in national
opinion polls. [ID:nN04356344]
                                
 Despite the rally in key European banking stocks, the
sector's troubles continued to force governments to take bold
measures. European Union leaders pressed for an overhaul of
global market rules.
                                
 EU finance ministers, meeting in Brussels, backed proposals
from the bloc's French presidency for reforming oversight of
global capital markets. [ID:nL2368185]
                                
 Australia's central bank became the latest to cut interest
rates, boosting expectations that central banks in the euro zone
and Britain which meet later this week would also aggressively
lower the cost of borrowing.
                                
 "We see it happening all around the globe. We had the U.S.,
Japan and now Australia, and we will have cuts in (the UK) and
the euro zone," said Bernd Meyer, head of pan-European equity
strategy at Deutsche Bank in London.
                                
 UBS AG <UBSN.VX>, one of Europe's hardest-hit banks, said a
government bailout was helping to stem client money outflows but
warned it could take a 6 billion Swiss franc ($5.20 billion) hit
in the fourth quarter due to accounting effects. [ID:nL487491]
                                
 UBS shares were up nearly 4 percent.
                                
 Royal Bank of Scotland <RBS.L> closed flat after slipping
over 9 percent. The bank, which is taking 20 billion pounds of
emergency UK government funds, reported a smaller-than-expected
writedown of 206 million pounds on toxic assets in the third
quarter but said bad debts were rising sharply.
                                
 Germany's BMW <BMWG.DE> abandoned its 2008 earnings forecast
and cut production after a 60-percent plunge in quarterly
profit. BMW shares slipped after the results, but closed 11.6
percent higher, outperforming the broader rise in stock markets.
                                
 (Reporting by Atul Prakash. Additional reporting by Rebekah
Curtis. Editing by John Stonestreet)