* FTSEurofirst 300 up 1 percent
* Banks surge on U.S. bailout hopes
* Autos fall: Daimler down on market talk of profit warning
By Joanne Frearson
LONDON, Oct 1 (Reuters) - European shares rose early on
Wednesday with banks the major gainers on hopes the U.S. Senate
will pass a new version of the $700 billion banking bailout
package later in the day.
By 0852 GMT the FTSEurofirst 300 <> index of top
European shares was up 1 percent at 1,074.04, adding to its 1.6
percent gain on Tuesday.
Banking stocks were the top weighted risers on the index.
Barclays <BARC.L>, UniCredit <CRDI.MI>, Royal Bank of Scotland
<RBS.L>, Credit Agricole <CAGR.PA> and HSBC <HSBA.L> were
0.7-6.2 percent higher.
The U.S. Senate will vote on Wednesday night on a new
version of the $700 billion bailout package for Wall Street,
rekindling hopes that the credit crisis can be stemmed before
claiming yet more banks and causing further damage to the global
economy. []
"The market is all about confidence and investors need to
just hang in there and not be swayed by different rumours," said
Justin Urquhart Stewart, director at Seven Investment
Management.
"The worrying sign is that this is based on no more than a
hopeful optimism without much basis to it at the moment. This is
the eye of the storm until we wait for the decision from the
U.S. Senate and see how the restructuring takes place."
Eurogroup Chairman Jean-Claude Juncker said European Union
countries will not let any big bank fail during the financial
crisis, on Wednesday, adding that the repercussions of the
turmoil would be felt for months. []
In the UK, the government is considering matching an Irish
move to guarantee all bank deposits in response to the global
credit crunch, the Daily Mail newspaper quoted unamed government
sources as saying. []
Jim Wood-Smith, head of research at Williams de Broe said:
"The Irish government guaranteeing all deposits sets a challenge
to other coutnries. There is no logic to hold a deposit in a UK
bank when people can put it in an Irish bank and have their
deposit guaranteed."
The FTSEurofirst 300 <> lost 11 percent in September,
making it the second-worst month of the year, and the index is
down 29 percent in 2008, punctured by a credit crisis that has
piled up losses at banks and slowed the economy.
Underlining worries about the economy, data showed on
Wednesday that euro zone manufacturing activity fell to a near
seven-year low in September.
"As the PMI tracks actual business levels rather than
sentiment, it is likely that the full impact of the worsening
financial crisis has yet to be felt, pointing to a weak final
quarter of 2008," said Chris Williamson, chief economist at data
compiler Markit.
Across Europe, the FTSE 100 index was up 1.5 percent,
Germany's DAX was down 0.01 percent and France's CAC 40 was 0.7
percent higher.
AUTOS IN REVERSE GEAR
Automobile stocks took most points off the FTSEurofirst 300,
and were the worst performer in Europe.
Daimler <DAIGn.DE> fell 5 percent on market talk that the
group was about to issue a profit warning. The shares pared
losses after it issued a denial but were still down 3 percent.
Porsche <PSHG_p.DE> slumped 9.8 percent after the group
reported that full fiscal-year revenue and unit sales stagnated
at its core sports cars business amid a softening economic
environment, it said on Wednesday, declining to give a forecast
for the current year. []
Volkswagen <VOWG.DE>, Renault <RENA.PA> and Peugeot
<PEUP.PA> fell 2-4.1 percent.
Among miners, Lonmin <LMI.L> slumped 28.4 percent after
Xstrata <XTA.L> said it would not make a formal offer for the
group. Xstrata was up 9.15 percent.
But the sector as a whole was higher, driven by a
1.4-percent rise in copper <MCU3=LX>.
BHP Billiton <BLT.L> tacked on 3 percent and Rio Tinto
<RIO.L> rose 7 percent after Australia's competition watchdog
cleared BHP's proposed around $114 billion bid for Rio, saying
it was unlikely to substantially lessen competition.
[]
Energy stocks were higher as oil extended its rally, rising
1 percent to hover at just under $102 a barrel.
BG Group <BG.L>, BP <BP.L>, and Tullow Oil <TLW.L> were
0.35-1.5 percent higher.
(Additional reporting Jonathan Cable; Editing by Greg Mahlich)
