* FTSEurofirst 300 closes up 1.5 percent
* U.S. data help lift financial stocks
* Energy shares slip, tracking weaker crude prices
By Atul Prakash
LONDON, Aug 28 (Reuters) - European stocks closed sharply
higher on Thursday as investors returned to the market after
crude prices slipped and data showed the U.S. economy expanded
at a much stronger rate than reported earlier.
The banking sector was the biggest weighted sectoral gainer
on the pan-European FTSEurofirst 300 <> index that ended
1.5 percent higher at 1,190.91 points. But the benchmark is
still down 21 percent this year.
Sentiment improved after the U.S. data lifted optimism about
a recovery in the economy, which has been under pressure
following troubles in the U.S. housing market.
Figures showed the U.S. economy expanded at a 3.3 percent
annual rate in the second quarter, as consumer spending and net
exports were more robust than initially estimated and
inventories fell less sharply.
Also, the number of U.S. workers filing new claims for
jobless benefits fell by 10,000 last week, but remained at
elevated levels indicating a weak labour market.
"People got really surprised by the second-quarter GDP
revision and jobless claims, which also dropped surprisingly,"
said Franz Wenzel, strategist at AXA Investment Managers.
"But we are not out of the woods. For that we would
definitely need something like a big relief on the inflation
front," Paris-based Wenzel said.
French bank Credit Agricole <CAGR.PA> was one of the top
gainers on the FTSEurofirst 300, jumping 8.9 percent despite
posting a 94 percent fall in quarterly profit.
"People think that they've got the bulk of the writedowns
out of the way and results in the third and fourth quarters will
be better," said a London-based trader.
Other banks also advanced, with Barclays <BARC.L> rising 5.8
percent, UBS AG <UBSN.VX> rising 4.6 percent, HBOS <HBOS.L>
jumping 4.2 percent and Royal Bank of Scotland <RBS.L> advancing
3.7 percent.
Insurance shares also gained on a broader market rally,
despite a slide of 8.8 percent in shares of Swiss Life <SLHN.VX>
after a profit warning and first-half earnings that missed
analysts' forecasts due to writedowns.
Across Europe, Britain's FTSE 100 <> closed up 1.3
percent, Germany's DAX <> up 1.6 percent and France's CAC
40 <> up 2 percent.
Investors weathered a volatile August on financial markets
by slightly lifting their stock holdings but kept exposure well
below average, Reuters polls showed on Thursday. []
ENERGY STOCKS FALL
Shares in oils and gas companies tracked crude prices
<CLc1>, which fell 2.4 percent after the International Energy
Agency pledged to help out with additional supply if Tropical
Storm Gustav damaged oil installations in the Gulf of Mexico.
BP <BP.L> fell 0.7 percent, Royal Dutch Shell <RDSa.L>
declined 0.1 percent and Tullow Oil <TLW.L> fell 0.6 percent.
Shares in European retailers were also down on concerns that
attempts to lure price-conscious shoppers may squeeze company
profit margins.
Dutch supermarket group Ahold <AHLN.AS> was 4 percent lower
after it reported a 14.2 percent drop in second-quarter profit,
with margins dented by price cuts and promotions.
But J. Sainsbury <SBRY.L> jumped nearly 8 percent as traders
cited renewed talk of a bid for Britain's third-largest
supermarket chain. Sainsbury said it would not comment on the
talk.
Daimler <DAIGn.DE> rose 0.8 percent, BMW <BMWG.DE> gained
2.2 percent and Peugeot <PEUP.PA> was up 1.5 percent.
(Editing by Sue Thomas)
