* FTSEurofirst 300 index closes 1.35 pct higher
* Automobile stocks gain on bailout package hopes
* Q-Cells slides on bleak market outlook
By Atul Prakash
LONDON, Dec 9 (Reuters) - European shares closed 1.35
percent higher on Tuesday as automobile stocks advanced on hopes
of a bailout package for the U.S. car industry, while BG Group
<BG.L> led energy shares higher.
The FTSEurofirst 300 <> index of top European shares
ended 11.5 points higher at 859.96 points. It jumped 6.9 percent
on Monday, but has lost 42 percent this year, hurt by a credit
crisis that has pushed many major economies into recession.
BMW <BMWG.DE>, Daimler <DAIGn.DE>, Volkswagen <VOWG.DE> and
Fiat <FIA.MI> were up between 0.8 and 5.6 percent, helped by a
proposed U.S. plan to extend emergency loans worth up to $15
billion to U.S. automakers in exchange for tough oversight and
possibly a government stake in the automakers. []
Energy stocks also rose, with BP <BP.L>, Royal Dutch Shell
<RDSa.L>, gas producer BG Group <BG.L> and Tullow Oil <TLW.L>
adding between 1.3 and 6.8 percent.
But despite this week's recovery in the European stock
market, investors remained nervous as gloomy economic news
painted a bleak picture.
"The market is just able to take a little bit of breath and
think: has this bad news that's coming through already been
discounted?," said Andrew Bell, head of research at Rensburg
Sheppards.
"It's going to take a while, probably months not weeks,
before the worst of the recession news has come through. But at
least investors are now showing a few signs of being prepared to
put in the balance the positives of the lower oil price and
policy stimulus."
A Reuters poll showed that stock markets remained in the
jaws of the most ferocious bear market in generations and
strategists and fund managers were only forecasting modest rises
for major world indexes next year. []
Europe produced gloomy economic indicators, Japan sank
further into recession in the third quarter and the Bank of
Canada declared the Canadian economy to be in a recession.
ECONOMIC SLOWDOWN
France reported a record trade deficit that reflected a
Europe-wide slowdown, and in Germany, the continent's economic
engine, a sentiment index suggested the economy was sliding
deeper into recession. []
British industrial output fell at its sharpest pace in
nearly six years in October, and revisions to previous months'
data suggested the economy might have contracted even faster in
the third quarter than initially thought. []
"Ultimately, equities are reacting positively to what has
been some pretty awful data. UK industrial production couldn't
have been much worse. It does seem that the market is now geared
towards poor data," said Neil Parker, strategist at Royal Bank
of Scotland.
Volkswagen <VOWG.DE>, Europe's largest carmaker, conceded
that fallout from the economic crisis was now hurting not only
demand for its cars but also its financing business.
The company said it had asked the German government for loan
guarantees for its financial services and banking units, and
labour leader Bernd Osterloh said the group would miss its
growth targets due to the crisis.
Several banks, however, advanced. Lloyds TSB <LLOY.L> rose
4.4 percent, Barclays <BARC.L> gained 2.6 percent, HSBC <HSBA.L>
increased 1.2 percent and UBS <UBSN.VX> was 2 percent higher.
But Q-Cells <QCEG.DE> slipped 18.6 percent after the world's
top solar cell maker cut its outlook and said its market would
remain subdued well into 2009, driving the sector lower on fears
the financial crisis would eat into demand for renewable energy.
Renewable Energy <REC.OL> slipped 10.5 percent.
Chipmaker Infineon <IFXGn.DE> fell 10.8 percent after Sony
Corp <6758.T> axed thousands of jobs and bearish comments from
Samsung <005930.KS> and Texas Instruments <TXN.N> added to the
gloom in the technology sector.
