* FTSEurofirst 300 rises 1 percent
* Rio Tinto slumps 36 percent as BHP Billiton withdraws bid
* Banks and oils gain
By Brian Gorman
LONDON, Nov 25 (Reuters) - European shares rose by midday on
Tuesday, adding to the previous session's hefty gain as banks
and oils advanced, but Rio Tinto <RIO.L> slumped nearly 40
percent after BHP Billiton <BLT.L> dropped its bid for the
group.
At 1150 GMT, the FTSEurofirst 300 <> index of top
European shares was up 1 percent at 837.03 points, having been
as low as 812.89.
The index rose 8.9 percent on Monday, its second-biggest
gain on record, but has lost more than 45 percent this year,
hurt by a credit crisis and worldwide economic slowdown.
Rio Tinto fell 35.8 percent after BHP Billiton said it
would not go ahead with a $66 billion bid for the company. BHP
was up 15.1 percent.
Other miners fell, as prices for copper, gold and other
metals eased. Anglo American <AAL.L>, Antofagasta <ANTO.L>,
Eurasian Natural Resources Corp.<ENRC.L>, Kazakhmys <KAZ.L>,
Lonmin <LMI.L>, Vedanta <VED.L>, Xstrata <XTA.L> were between
5.9 percent and 8.9 percent lower.
"We're having a little pause today, after strong gains
yesterday," said Philippe Gijsels, senior equity strategist at
Fortis Bank, in Brussels. "The markets are still a bit hesitant.
We had hoped for better news."
He added: "But you have to put yesterday in perspective. The
market is oversold, and we still expect a bear market rally in
the next few weeks, with some bottom fishing."
French insurer AXA <AXAF.PA> fell 11 percent after it cut
its 2008 profit outlook, citing the global financial crisis, and
said its 2012 financial goals were becoming increasingly
obsolete.
"AXA's financial flexibility is significantly limited," DZ
Bank said in a note.
The DJ Stoxx insurance index <.SXIP> fell 1.2 percent, with
Dutch ING <ING.AS> down 3.6 percent, Germany's Allianz <ALVG.DE>
dropping 2.7 percent and Britain's Standard Life <SL.L> 0.8
percent lower.
VOLKSWAGEN FALLS
Volkswagen was 13.9 percent lower, dropping for a second
day, after it said it was considering suspending production at
its main Wolfsburg plant from Dec. 18 to Jan. 11 due to weak
demand.
Shares in Britain's Imperial Tobacco <IMT.L>, maker of
Lambert & Butler, fell 1.3 percent after it posted annual
earnings that disappointed some analysts. .
Spanish oil company Repsol <REP.MC>. fell 1.5 percent amid
press reports that Russian giant Lukoil <LKOH.MM> is having
difficulty financing its purchase of a 30 percent stake in the
company, worth more than 10 billion euros.
Most other oils were higher, though crude prices <CLc1> fell
3.8 percent to $52.41 a barrel. Total <TOTF.PA> and BG Group
<BG.L> were up 2 and 4.3 percent respectively. ENI <ENI.MI> was
down 2 percent.
Banks were generally positive. Allied Irish Banks <ALBK.I>
and Bank of Ireland were up 11.4 and 6.8 percent respectively.
Barclays <BARC.L>, Commerzbank <CBKG.DE>, Credit Suisse
<CSGN.VX>, Deutsche Bank <DBGKn.DE>, HSBC <HSBA.L>, Lloyds
<LLOY.L>, Natixis <CNAT.PA>, Royal Bank of Scotland <RBS.L>, and
UBS <UBSN.VX> were up between 2 percent and 8.1 percent.
Germany's Federal Statistics Office confirmed growth
contracted by 0.5 percent in the third quarter, pushing Europe's
largest economy into recession for the first time in five years.
"The decline reflects weak global demand and the euro's
strong gains up to mid-year. Even though the euro has meanwhile
lost considerable ground again, the outlook for exports and
investment remains gloomy," Commerzbank said in a note.
Wall Street was set for a higher open following a strong
two-day rally. Futures for the Dow Jones <DJc1>, S&P 500 <SPc1>
and Nasdaq <NDc1> are up between 0.7 and 1 percent.
The U.S. economy shrunk at an annualised rate of 0.5 percent
in the third quarter, data due before the opening of the market
is likely to show, Reuters Estimates showed. The initial reading
suggested the economy had contracted by 0.3 percent.
"It's already priced in," said Fortis' Gijsels. "What is not
priced in is the fourth quarter, which is extremely important
for the economy, and consumer spending, and where we can already
see a decline."
Across Europe, Britain's FTSE 100 <> and France's
CAC-40 <> were up 1 percent; Germany's DAX <> was
down 0.1 percent.
(Additional reporting by Peter Starck; Editing by Andrew
Macdonald)
