* FTSEurofirst 300 rises 1 percent
* Energy, metals shares gain on firm commods prices
* Banks mixed, insurers down
By Atul Prakash
LONDON, Dec 29 (Reuters) - European shares rose 1 percent in
thin trading on Monday, with stronger crude and metals prices
boosting commodity stocks, but analysts said the market remained
cautious due to gloomy outlook in the near term.
At 0928 GMT, the FTSEurofirst 300 <> index of top
European shares was up 7.74 points at 811.52 after closing 0.5
percent lower in the previous trading session. The index is down
more than 5 percent this month, hurt by a credit crisis.
The crisis has wiped nearly half the value off European
stock markets so far in 2008 as recession infects a host of
major economies worldwide, compared to annual gains of 1.6
percent in 2007, 16 percent in 2006 and 22 percent in 2005.
"The trading over the Christmas period has been somewhat
disappointing and therefore, in the short term, the reality is
that markets are going to remain volatile and continue to be
under pressure," said Henk Potts, equity strategist at Barclays
Stockbrokers.
"There is also an expectation that corporate profitability
is going to be under pressure. We think it's going to drop by 20
percent during the course of 2009," he added.
But energy shares got support from rising crude prices,
which rose 5 percent to nearly $40 a barrel as analysts said the
conflict between Israel and Hamas had reminded traders of the
geopolitical risk to crude supplies from the Middle East.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group
<BG.L> and Tullow Oil <TLW.L> added between 3.3 and 4.6 percent.
Miners also gained on the back of firmer metals prices. BHP
Billiton <BLT.L>, Anglo American <AAL.L>, Vedanta Resources
<VED.L>, Lonmin <LMI.L>, Kazakhmys <KAZ.L>, Xstrata <XTA.L>,
Antofagasta <ANTO.L> and Rio Tinto <RIO.L> rising between 2.8
and 7.4 percent.
Across Europe, the FTSE 100 index <> was 2.3 percent
up, Germany's DAX <> rose 1.7 percent and France's CAC 40
<> was 1.2 percent higher.
BANKS MIXED, INSURERS DOWN
Banks were mixed, with Commerzbank <CBKG.DE> rising 6.7
percent and Societe Generale <SOGN.PA> increasing 2.7 percent.
But Fortis <FOR.BR> fell 1 percent and HBOS <HBOS.L> was down
0.4 percent.
Royal Bank of Scotland <RBS.L> gained 5.6 percent. The bank
said on Sunday it was pursuing a disposal of its insurance
operations despite a newspaper report which said the
government-controlled bank was preparing to abandon the plan.
Insurers were under pressure, with Standard Life <SL.L>
falling 2.5 percent and Zurich Financial Services Group
<ZURN.VX> down 1 percent and ING <ING.AS> falling 0.9 percent.
Analysts said trading volumes were expected to remain thin
this year as many investors were away between Christmas and New
Year holidays.
Drugmakers advanced, with AstraZeneca <AZN.L> rising 4
percent, Shire <SHP.L> adding 1.9 percent and GlaxoSmithKline
<GSK.L> rising 1.1 percent.
Novartis AG <NOVN.VX> was up 0.2 percent. The Swiss
drugmaker said it will license a programme of vaccines from U.S.
group AlphaVax against cytomegalovirus (CMV) infections, which
can cause disability in newborn babies.
(Editing by Mike Nesbit)
