* FTSEurofirst 300 up 1.7 pct, Euro STOXX 50 up 1.9 pct
* UK's FTSE 100, Germany's DAX hit 2-year highs
* VDAX-NEW volatility index tumbles 13 percent
* EADS, Rolls sink on Qantas A380 woes, euro strength
* For up-to-the-minute market news, click on []
By Blaise Robinson
PARIS, Nov 4 (Reuters) - European stocks rallied on Thursday
and hit levels not seen since April as the U.S. Federal
Reserve's decision to pump more money into the economy spurred a
sharp rise in investors' appetite for risk and weighed on the
dollar.
The FTSEurofirst 300 <> index of top European shares
closed 1.7 percent higher at 1,107.05 points -- marking its
biggest one-day rise in more than two months -- while both the
UK's FTSE 100 index <> and Germany's DAX index <>
reached two-year highs.
"It's good news to see the Fed taking action, and we have to
trust (Fed Chairman Ben) Bernanke to make sure things don't get
out of hand," said David Thebault, head of quantitative sales
trading, at Global Equities in Paris.
The Fed, under pressure to revive the lagging economy,
committed to buy $600 billion in government bonds and said it
could adjust purchases depending on the strength of the
recovery. []
The Fed's move to buy more Treasuries pushed U.S. yields
lower and sent the dollar sinking to a more than nine-month
trough against the euro, and prompted investors to seek returns
elsewhere.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
PDF on Fed's action: http://r.reuters.com/cyh73q
Graphic on assets and QE http://r.reuters.com/kyw48p
For Reuters Insider interview with BNP Paribas CEO:
http://link.reuters.com/pun63q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The VDAX-NEW volatility index <.V1XI>, one of Europe's main
barometers of investor anxiety, dropped 13 percent to hit a near
two-week low, signalling a sharp jump in investors' appetite for
risky assets.
Thursday's stock rally was paced by mining shares climbing
along with dollar-denominated commodity prices. Xstrata <XTA.L>
soared 7.1 percent, BHP Billiton <BLT.L> surged 6.6 percent, and
Total <TOTF.PA> gained 2.6 percent.
"The stronger euro brings more foreign investors into euro
zone stocks, which could help regional indexes catch up with
performances seen on Wall Street and in London and Frankfurt so
far this year," Thebault said.
"But on the other hand, investors will start cashing in
profits made on stocks of big exporters. With the euro above
$1.35-$1.38, firms such as EADS are feeling the sting of a
strong currency."
EADS <EAD.PA> dropped 4.1 percent and Rolls-Royce <RR.L>
fell 5 percent after Qantas Airways <QAN.AX> suspended all
Airbus A380 flights following an incident of engine failure on
one plane in Singapore. Traders also mentioned the euro strength
weighing on EADS.
Around Europe, UK's FTSE 100 index <> gained 2 percent,
Germany's DAX index <> rose 1.8 percent, and France's CAC
40 <> added 1.9 percent.
So far this year, the FTSEurofirst 300 <> index is up
5.9 percent, while the FTSE 100 is up 8.3 percent, the DAX 13
percent is higher, while the CAC is down 0.5 percent and Spain's
IBEX <> is 11 percent lower.
Investors' mood was also brightened on Thursday by strong
results from bellwethers Unilever <ULVR.L> and BNP Paribas
<BNPP.PA>, rising 6.3 percent and 3.7 percent respectively.
France's biggest listed bank pleased investors by posting
forecast-beating third-quarter results and ruling out a capital
increase to meet tougher industry rules, while Unilever, the
Anglo-Dutch consumer goods maker, surprised investors with a
rise in third-quarter profit margins. []
[]
(Reporting by Blaise Robinson; Editing by Jon Loades-Carter)
