* FTSEurofirst 300 gains 1 percent
* Banks advance after previous session's rally
* Miners slip, tracking weaker metals prices
By Atul Prakash
LONDON, Sept 9 (Reuters) - European shares rose on Tuesday,
led by banking stocks that extended gains after a strong rally
in the previous session on the U.S. government's move to take
control of top mortgage companies.
A sharp decline in crude prices also eased inflation
concerns and lifted market sentiment, analysts said.
At 0906 GMT, the FTSEurofirst 300 <> index of leading
European shares was up 1 percent at 1,174.86 points after
closing 3.3 percent higher on Monday. But the benchmark is still
down 22 percent this year, battered by a credit crisis that has
hit bank stocks especially hard.
Banks were the top-weighted gainer the FTSEurofirst 300 on
Tuesday, with Lloyds TSB <LLOY.L> rising 2.5 percent, HBOS
<HBOS.L> advancing 3.7 percent, Standard Chartered Bank <STAN.L>
gaining 1.9 percent and Barclays <BARC.L> rising 4.9 percent.
BNP Paribas <BNPP.PA> was up 2.7 percent, Credit Agricole
<CAGR.PA> added 2.8 percent and Fortis <FOR.BR> rose 2 percent.
"Banks have been oversold which is typical of bear markets.
Now there has been some rectification and return to some
normality," said Howard Wheeldon, senior strategist at BGC
Partners.
Stock markets worldwide rose sharply on Monday, powered by
financials as investors applauded the U.S. government's move to
rescue mortgage financiers Fannie Mae <FNM.N> and Freddie Mac
<FRE.N>.
The markets also got support from U.S. crude futures <CLc1>,
which fell sharply as traders shed commodity positions to join
the rally in the dollar, which hit a one-year peak against a
basket of other currencies on Monday.
CAUTIOUS TRADE
But some analysts remained cautious because of persistent
concerns over the global economy and financial markets.
"While it is good news for the market that the U.S.
government has seized control of Fannie Mae and Freddie Mac,
there are still ongoing global growth woes," said Bernard
McAlinden, investment strategist at NCB Stockbrokers.
"Although there is indirect positive sentiment feeding
through onto Europe, it does not improve the European mortgage
market situation. There are still problems," he added.
Across Europe, Britain's FTSE <> rose 1.3 percent,
Germany's DAX <> gained 0.8 percent and France's CAC
<> was up 0.7 percent.
Dealing on the London Stock Exchange was halted for several
hours on Monday, meaning that activity on Tuesday could be in
part an overhang from trades investors were unable to carry out
in the previous session.
Energy shares were mixed, with BG Group <BG.L> falling 0.2
percent, Royal Dutch Shell <RDSa.AS> rising 0.1 percent, Tullow
Oil <TLW.L> down 0.1 percent and BP <BP.L> gaining 0.7 percent.
Miners fell, tracking weaker metals prices, with BHP
Billiton <BLT.L>, Anglo American <AAL.L>, Lonmin <LMI.L>,
Kazakhmys <KAZ.L>, Xstrata <XTA.L>, Antofagasta <ANTO.L> and Rio
Tinto <RIO.L> all falling between 0.7 and 2.4 percent.
Shares in Germany's Bayer <BAYG.DE> rose 3.5 percent on
market talk of takeover interest from U.S. rival drugs company
Pfizer <PFE.N>, traders said. Bayer declined to comment, while
Pfizer was not immediately available to comment.
Telekom Austria <TELA.VI> rose 0.2 percent after a newspaper
report said Egyptian telecoms operator Orascom <ORTE.CA> was
looking at buying the company. Telekom Austria declined to
comment.
(Additional reporting by Joanne Frearson; Editing by Quentin
Bryar)
