Europe stocks up; ECB leaves rates unchanged

                                
 * FTSEurofirst 300 index up 1 pct
                                
 * ECB leaves rates unchanged
                                
 * BoE raises quantiative easing
                                
 * Earnings results push banks, insurers higher
                                
 
                                
 By Joanne Frearson
                                
 LONDON, Aug 6 (Reuters) - European shares rose on Thursday
as the ECB left interest rates unchanged and the Bank of England
extended its quantitative easing programme to 175 billion
sterling, with banks boosted by results from KBC <KBC.BR> and
insurer Aviva <AV.L>.
                                
 By 1154 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was up 1 percent at 943.57 points, having
been up as much as 945.47 points earlier.
                                
 The European Central Bank kept its main refinancing rate
unchanged at a record low of 1 percent as it waits to see the
impact of efforts so far to revive the economy and credit flows.
[ID:nL622515]
                                
 In the UK, the Bank of England extended its quantitative
easing programme, raising the size of its bond purchase scheme
to an unexpectedly large 175 billion pounds, from 125 billion,
and held interest rates at 0.5 percent. [ID:nLAC003395]
                                
 The decision enables the central bank to continue its
programme of asset purchases with newly created money -- which
it started in March to boost Britain's recession-hit economy --
as the last of the 125 billion pounds was spent in late July.
                                
 "The market came off a bit initially as it was not what the
market was expecting and investors started to panic. But the
market over the past couple of months has rallied over the Bank
of England's quantitative easing programme and this is just a
continuation of that," a London-based trader said.
                                
 Banks added the most points to the index, although stocks
were mixed. Belgian banking and insurance group KBC surged 19.4
percent after it returned to profit in the second quarter,
following three straight quarterly losses. [ID:nL5441874]
                                
 "Financials remain the focus, the general view is if banks
are starting to show less bad results then the market view seems
to be that things are getting better," said Peter Dixon,
economist at Commerzbank.
                                
 French bank Natixis <CNAT.PA> rose 15.7 percent following
market rumours that it might be delisted.
                                
 Among other banks Barclays <BARC.L>, Societe Generale
<SOGN.PA>, Credit Suisse <CSGN.VX> and Banco Santander <SAN.MC>
were up 1.6-7.2 percent.
                                
 However, Commerzbank <CBKG.DE> retreated from earlier gains
and was down 0.2 percent. The bank's second-quarter operating
results beat analyst expectations, but it said it is reviewing
whether to use the bad bank scheme. [ID:nL6511927]
                                
 
                                
 RESULTS BOOST INSURERS
                                
 Insurers were boosted by a slew of positive earnings.
British insurer Aviva rose 8.9 percent after it announced a
smaller-than-expected cut in its dividend and a partial float of
its Delta Lloyd unit, when reporting its first-half results.
[ID:nL612559]
                                
 Swiss insurer Zurich Financial Services <ZURN.VX> gained 2.3
percent after it beat second-quarter forecasts and said its
capital position was strong and it remained confident it was
well positioned in the financial crisis. [ID:nL5617004]
                                
 AXA <AXAF.PA>, Europe's second-biggest insurer by market
capitalisation, ticked up 1.9 percent after it posted a
smaller-than-expected decline in first-half earnings and said it
was ready to face any further downturn in the market.
[ID:nL4712587]
                                
 Food producers were among the high movers. Unilever <ULVR.L>
<UNc.AS>, gained 6.6 percent after the world's third-biggest
food and consumer goods group beat consensus expectations with a
4.1 percent rise in second-quarter underlying sales and a
surprisingly strong return to volume growth. [ID:nL4534023]
                                
 The FTSEurofits 300 index is up more than 46 percent from
the lifetime low on March 9, as investors have become more
confident on the prospects for a recovery, and with earnings
season having been mostly positive.
                                
 "The 200-day moving averages are turning up, a signal that
it's a bull market," said Bernard McAlinden, investment
strategist at NCB Stockbrokers, in Dublin.
                                
 "But the market is trading above the averages for now and,
in the near term, there is vulnerability to some kind of
correction, as it looks stretched."
                                
 Across Europe, the FTSE 100 <.FTSE> index was up 1.5
percent, Germany's DAX <.GDAXI> was up 1 percent and France's
CAC 40 <.FCHI> was 1.2 percent higher.
 (Additional reporting by Brian Gorman; editing by Simon Jessop)