European shares rise for 7th day, led by miners

                                
 * FTSEurofirst 300 rises 0.8 pct, up for 7th straight day
                                
 * Mining stocks top gainers on higher copper price
                                
 * Nokia drops 2.5 pct after Morgan Stanley downgrade

                                
 By Peter Starck
                                
 FRANKFURT, July 21 (Reuters) - European shares rose for the
seventh straight session on Tuesday, reaching their highest
close since early January, with mining and energy stocks in the
lead while banks and mobile phone maker Nokia <NOK1V.HE> fell.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
advanced 0.8 percent to 888.18 points -- its highest close since
Jan. 6.
                                
 The European benchmark index has gained 37.5 percent since
it hit a lifetime low on March 9.
                                
 "I am very confident about European stocks," said Gary
Clarke, head of European Equity at fund manager Schroders.
                                
 The price-to-earnings ratio (P/E) of European shares at
11-12 was "very attractive", for example compared with U.S.
stocks trading at a P/E of about 15, he said in a note, adding
that dividend yields in Europe were higher than in the United
States.
                                
 Credit Suisse in a global equity strategy note upgraded
equities to "overweight".
                                
 "We are halfway through the first 'V' of an upward sloping
W-shaped recovery, with a likely peak in early Q4. Corporates
have to rebuild inventories, which could send global industrial
production up 10 percent year-on-year," Credit Suisse said.
                                
 "Earnings revisions are now positive for the first time
since August 2007," Credit Suisse said, adding that this was 
usually associated with stocks rising 5 percent over 3 months.
                                
 Federal Reserve Chairman Ben Bernanke, testifying before the
House Financial Services Committee, said on Tuesday the outlook
for the U.S. economy appeared to be improving [ID:nN21221058].
                                
 Some bellwether U.S. companies, notably Caterpillar <CAT.N>
[ID:nN21196202], reported quarterly earnings above market
expectations.
                                
 Caterpillar, however, later warned that the third quarter
will be "very tough" on sales and it was conceivable the company
would lose money during the period [ID:nN21229028], sending U.S.
benchmark stock indexes into negative territory. [ID:nN21234320]
                                
 
                                
 COPPER RALLY
                                
 In Europe, mining added the most points to the FTSEurofirst
300 index. Copper prices <MCU3> rose more than 2 percent to
nine-month highs. [ID:nLL734761]
                                
 Anglo American <AAL.L> gained 4.1 percent, BHP Billiton
<BLT.L> was up 2.6 percent and Rio Tinto <RIO.L> added 2.3
percent. the DJ Stoxx basic resources index <.SXPP>, which
includes miners, rose 2.2 percent.
                                
 Crude oil <CLc1> touched a two-week high above $65 a barrel
[ID:nSIN115579], lifting European energy stocks <.SXEP> such as
Total <TOTF.PA>, up 1.7 percent, ENI <ENI.MI>, up 1.2 percent,
and StatoilHydro <STL.OL>, also up 1.2 percent.
                                
 Healthcare was another sector showing strength, AstraZeneca
<AZN.L> and GlaxoSmithKline <GSK.L> rising 1.7 percent each.
                                
 Among food retailers Wm Morrison <MRW.L> shot up 8.2 percent
after the company raised its full-year outlook
[ID:nLL250145]. Sainsbury <SBRY.L> climbed 3.1 percent,
Carrefour <CARR.PA> added 1.7 percent and Tesco <TSCO.L> rose
1.4 percent.
                                
 Upmarket French luxury goods group Hermes <HRMS.PA> rose 4
percent after posting a 12 percent rise in second-quarter sales,
driven by demand for its handbags and perfumes. [ID:nLK183165]
                                
 Banks <.SX7P>, which have outperformed the broader market
with a rise of 122 percent since March 9, were among Tuesday's
top losers, with CS Group <CSGN.VX> down 3.6 percent, BNP
Paribas <BNPP.PA> falling 1.7 percent, UBS <UBSN.VX> dropping
1.4 percent and Barclays <BARC.L> closing 1.2 percent lower.
                                
 Nokia <NOK1V.HE> lost 2.5 percent after Morgan Stanley
downgraded the stock to "underweight" from "overweight", citing
a "threat from rising competition in all segments".
                                
 Around Europe, Britain's FTSE 100 index <.FTSE> rose 0.9
percent, the German DAX <.GDAXI> added 1.3 percent and the
French CAC 40 <.FCHI> gained 1.0 percent while Zurich's SMI
<.SSMI> lagged with a gain of 0.2 percent.
 (Additional reporting by Blaise Robinson in Paris; editing by
Elaine Hardcastle)