* FTSEurofirst 300 index recovers to close 0.2 pct higher
* BP plunges after oil leak attempt fails
* Prudential gains as AIG deal near collapse
By Brian Gorman
LONDON, June 1 (Reuters) - European shares recovered from
steep losses to close slightly higher on Tuesday, as strong U.S.
data helped to ease investors' worries about the global economic
recovery, though BP <BP.L> fell heavily.
The pan-European FTSEurofirst 300 <> index rose 0.2
percent to close at 1,002.80 points, having been down as much as
2 percent earlier.
"People will continue to look to economic data to see how
the recovery is panning out, as opposed to just rumours and
fear, which have been driving the market in the last month or
so," said Joshua Raymond, strategist at City Index.
Key U.S. data boosted confidence. Construction spending rose
unexpectedly in April, recording its largest monthly increase in
nearly 10 years, according to a government report. Economists
surveyed by Reuters forecast that construction spending would be
unchanged in April.
Moreover, the U.S. manufacturing sector expanded in May for
a tenth straight month while employment rose slightly to its
best level in six years, according to an industry report.
[]
Index heavyweight BP capped the benchmark's gains, slumping
13.1 percent, as it struggled to contain an oil spill in the
U.S. Gulf of Mexico. BP is down more than 34 percent from a peak
last month, wiping more than 40 billion pounds ($58.11 billion)
off its value.
However, most other energy shares ended higher, as oil
prices <CLc1> bounced, and the euro recovered from a four-year
low.
Total <TOTF.PA>, BG <BG.L>, Royal Dutch Shell <RDSa.AS> and
StatoilHydro <STL.OL> rose between 0.6 and 2.6 percent.
Banks fell, but were off their lows by the end of the day,
with Spain's Banco Santander <SAN.MC> and BBVA <BBVA.MC> down
1.5 and 1.4 percent respectively.
The European Central Bank warned late on Monday that euro
zone banks may face another 195 billion euros ($236.9 billion)
in potential write downs. []
Earlier in the session, investor confidence had been fragile
after manufacturing growth in China slowed down in May, and euro
zone manufacturing activity expanded that month at a
considerably more sluggish pace than April's 46-month high.
[]
The index lost 5.8 percent in May, hit by intensifying fears
that a sovereign debt crisis in the euro zone could derail the
global economic recovery.
Across Europe, the FTSE 100 <> index finished the day
0.5 percent lower, Germany's DAX <> rose 0.3 percent and
France's CAC 40 <> fell 0.1 percent.
Spain's IBEX <> lost 0.6 percent, Portugal's PSI 20
<> rose 0.4 percent and Italy's benchmark <.FTMIB> slipped
1.4 percent.
Wall Street was mixed around the time European bourses were
closing. The Dow Jones <> and Nasdaq Composite <> were
up 0.3 and 0.2 percent respectively; the S&P 500 <.SPX> was down
0.1 percent.
U.S. and UK markets were closed on Monday for a holiday.
PRUDENTIAL GAINS
Among other individual shares, Prudential <PRU.L> gained 6.3
percent after American International Group <AIG.N> said it would
not consider revising the terms of a deal for its Asian life
insurance unit with the British insurer. The deal is now close
to collapse. []
Irish airline Ryanair <RYA.I> rose 4.4 percent after it
brought forward plans to pay its first dividend since being
floated in 1997 and swung back to a full-year profit which was
ahead of most rivals. []
($1=.6883 Pound)
($1=.8231 Euro)
(Editing by Jon Loades-Carter)
