* FTSEurofirst 300 up 0.5 pct
* Banks and oils rise
* Eurotunnel shares fall as Eurostar halts
* For up-to-the-minute market news, click on []
By Dominic Lau
LONDON, Dec 21 (Reuters) - European shares broke a two-day
losing run on Monday, with banks recovering from concerns over
tougher capital regulations while oil producers rose as crude
prices steadied following the previous session's gains.
London Stock Exchange <LSE.L> rose 1 percent after it agreed
a deal to take a 60 percent stake in loss-making trading
platform rival Turquoise and said it would merge it with its own
"dark pool" platform, Baikal, to create a new pan-European
venture.
By 0842 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.5 percent at 1,017.69 points, after
losing 0.5 percent in the previous session.
"It's important that we still play with the cyclicals (for
2010) because they feed very well into the demand growth in the
BRIC nations," said Stephen Pope, chief global market strategist
at Cantor Fitzgerald in London.
"I would say go with the cyclical things like steel and
mining. I suggest one has to be very selective in the auto
industry," he said. "I would say some of the luxury goods are
going to move on quite well because money is still being spent
at the high end of the consumer spectrum."
Banks <.SX7P> were among the top gainers in Europe,
rebounding after last week's losses following proposed tougher
new rules from the Basel Committee on Banking Supervision.
HSBC <HSBA.L>, Barclays <BARC.L>, Credit Suisse <CSGN.VX>,
UBS <UBSN.VX>, Royal Bank of Scotland <RBS.L> and Banco
Santander <SAN.MC> added 0.4 to 1.5 percent.
Deutsche Bank, however, said in a report that the sector
would underperform in 2010 given the more restrictive regulatory
environment.
"If economic recovery continues in 2010, the next phase in
the cycle is to look for growth. The regulatory changes proposed
by Basel are not sufficient to destabilise the system. But they
are sufficient to drive growth out of the sector," it said.
The broker said the new rules "would have relatively less
effect on smaller less complex retail banks in Spain and Italy."
Across Europe, Britain's FTSE 100 <> was up 0.3
percent, Germany's DAX <> gained 0.4 percent and France's
CAC 40 <> put on 0.4 percent.
Investors will keep an eye on Dubai, where debt-ridden
conglomerate Dubai World [] is expected on Monday to ask
key creditors for more time to pay off its loans.
The Gulf Arab emirate's flagship company is also expected to
formalise a request for a payment standstill at a meeting with
some 90 creditors. []
OILS GAIN
Heavyweight oil producers were also in demand as crude
prices <CLc1> steadied after a 1 percent rise on Friday. BP
<BP.L>, Royal Dutch Shell <RDSa.AS>, Total <TOTF.PA> and Tullow
Oil <TLW.L> were up 0.3 to 1.2 percent.
On the downside, Volkswagen <VOWG.DE> ordinary shares lost
3.1 percent after Deutsche Boerse said they would be replaced by
preferred counterparts <VOWG_p.DE> in Frankfurt's large-cap DAX
index <> effective Dec. 23. Its preference shares advanced
1.5 percent.
Actelion <ATLN.VX> dropped 2.7 percent after Europe's
biggest biotech company said its almorexant insomnia drug had
unspecified safety problems in a late-stage trial, even though
it met its main target. []
Shares in Eurotunnel <GETP.PA> shed 2.2 percent after the
operating company said weekend suspensions to Eurostar rail
services caused by acute weather conditions would continue
through Monday while trains are modified to cope with more snow
expected in northern France.
The pan-European index has rallied nearly 58 percent since
hitting a floor in early March, and is up more than 22 percent
so far this year after tumbling 45 percent in 2008.
(editing by John Stonestreet)
