Banks, commodities drive 1.7% rise in Europe shares

                                
 By Sitaraman Shankar
                                
 LONDON, April 16 (Reuters) - European shares ended sharply
higher on Wednesday, driven by gains in banks after JPMorgan's
<JPM.N> results reassured worried investors, and by soaring
commodity prices that lifted miners and oils.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
ended 1.65 percent higher at 1,302.78 points, with the commodity
and bank-heavy British FTSE 100 <.FTSE> a strong out-performer.
                                
 Rio Tinto <RIO.L> rose 6 percent, Royal Bank of Scotland
<RBS.L> jumped 7.6 percent and Total <TOTF.PA> gained 2.4
percent, making them the top weighted gainers on the
pan-European benchmark.
                                
 The FTSEurofirst 300 has risen 3.2 percent so far in April,
putting it on track for its first monthly gain since October,
but it has been an erratic journey through the month, with six
up days and six down days.
                                
 Analysts said the signals were still mixed, at best.
                                
 "We remain cautious -- this is still a bear market rally,"
said Fortis bank strategist Philippe Gijsels in Brussels.
                                
 "The main drivers are Intel <INTC.O> and JPMorgan, which are
putting into some doubt the thesis that started some days ago
with bad figures from GE <GE.N> and Alcoa <AA.N>, but we still
think earnings will decline and guidance will come in lighter."
                                
 A relatively upbeat outlook from Intel late on Tuesday and
strong earnings from LG Electronics <066570.KS> helped the
technology sector, where Nokia <NOK1V.HE> rose 3.4 percent, and
Infineon <IFXGn.DE> soared 10 percent.
                                
 JPMorgan said quarterly profit fell 50 percent but the third
largest U.S. bank was able to skirt the massive losses that have
crippled many rivals, and its shares were up 4.6 percent in New
York.
                                
 Banks, the sector worst hit by credit market problems that
brought a screeching halt to a stock bull run last year, were
strong.
                                
 Credit Suisse <CSGN.VX> rose 2.1 percent, Deutsche Bank
<DBKGn.DE> climbed 3 percent and UBS <UBSN.VX> ticked up 1
percent.
                                
 Barclays <BARC.L> jumped 6.7 percent, HBOS <HBOS.L> 5
percent and Royal Bank of Scotland 7.6 percent, as a source
close to the matter said British authorities were considering a
scheme to swap mortgage collateral for government bonds.
                                
 The FTSE 100 index rose 2.4 percent, Germany's DAX index
<.GDAXI> was up 1.8 percent, and France's CAC 40 <.FCHI> gained
1.6 percent.
                                
 
                                
 COMMODITIES AFIRE; RESULTS MIXED
                                
 Oil hit a record high of $114.95 a barrel before coming off,
while the DJ Stoxx European basic resources index <.SXPP> jumped
4.3 percent, making it the best performing of the Stoxx sectoral
indexes, as copper prices jumped nearly 3 percent.
                                
 BHP Billiton <BLT.L> and Lonmin <LMI.L> gained 5.4 percent.
Rio posted a mixed first-quarter production report but the stock
was helped by talk that BHP might raise its offer for the
company.
                                
 One source familiar with the matter told Reuters that he was
not aware that BHP was working on a revised offer and the
companies declined to comment.
                                
 Heavyweight oil stocks gained -- BP <BP.L> rose 2.1 percent,
Total <TOTF.PA> 2.4 percent and Royal Dutch Shell <RDSa.L> 2.7
percent.
                                
 "There's lots of speculative money in the commodities space
-- equities are volatile, credit markets are difficult and cash
is not an option because of inflation," said Fortis' Gijsels.
                                
 "But we think commodities will correct for a number of
months before resuming a long-term bull market."
                                
 Strong euro zone inflation figures pushed the euro <EUR=> to
fresh peaks against the dollar just shy of $1.60. Corporate
results were mixed, though deal talk provided support.
                                
 LVMH <LVMH.PA>, the world's biggest luxury goods group, 
rose 4 percent after reporting a 12 percent rise in comparable
first-quarter sales and said it expected higher 2008 earnings.
                                
 L'Oreal <OREP.PA> was among major losers, shedding 7.4
percent after posting first-quarter like-for-like sales below
expectations late on Tuesday, blaming exceptionally tough
trading in the United States.
                                
 TeliaSonera <TLSN.ST> soared 11.6 percent after Le Figaro
newspaper reported that France Telecom <FTE.PA> was studying a
possible takeover of the group through a share swap. France
Telecom dropped 6 percent.
                                
 Both TeliaSonera and France Telecom declined to comment.
                                
 Investors will keep an eye on quarterly results from Wall
Street firms Merrill Lynch & Co <MER.N> on Thursday and
Citigroup Inc <C.N> on Friday, that could shed light on the
ongoing impact of the global credit crisis.
 (Additional reporting by Blaise Robinson in Paris and Amanda
Cooper in London)
                                
 (Reporting by Sitaraman Shankar; editing by Elaine
Hardcastle)