* FTSEurofirst 300 closes 0.6 percent higher
* Shares pare gains after Bernanke fiscal tightening remarks
* Banks and insurers among top gainers; Greek banks strong
By Brian Gorman
LONDON, Feb 10 (Reuters) - European shares rose on Wednesday
on hopes of a possible European Union rescue plan for Greece,
with banks stronger, but gains were pared after U.S. Federal
Reserve Chairman Ben Bernanke outlined fiscal tightening plans.
The FTSEurofirst 300 <> index of top European shares
rose for a third day, closing 0.6 percent up at 987.13 points,
down from the day's high of 996.12.
The index is up 52.9 percent from its lifetime low of March
9, 2009, but is down 8.1 percent from a 15-month high it reached
on Jan 11.
Banks added the most points, continuing to recover some of
the ground lost last week. BNP Paribas <BNPP.PA>, Banco
Santander <SAN.MC>, Deutsche Bank <DBKGn.DE>, HSBC <HSBA.L> and
Societe Generale <SOGN.PA> rose between 1.2 and 4.3 percent.
Credit Suisse <CSGN.VX> rose 3.4 percent ahead of its
full-year results on Thursday.
Expectations of a rescue plan for Greece rose after sources
in Germany's coalition government said Berlin is in intense
international and domestic negotiations about possible aid to
debt-stricken Greece, but said a decision was not imminent.
[]
European Union leaders are set to hold a special summit on
the economy on Thursday.
"The markets were higher on rumours of a bailout for Greece,
but then it was all about Bernanke," said Heino Ruland,
strategist at Ruland Research, in Frankfurt.
"It looks like he's doing what everybody expected, at least
verbally tightening policy. I think we may move sideways for a
while. We've had a correction. I don't see any reason for the
market to move sharply higher or lower. It will depend on
earnings."
"Although at present the U.S. economy continues to require
the support of highly accommodative monetary policies, at some
point the Federal Reserve will need to tighten financial
conditions," Bernanke said in remarks prepared for a hearing of
the House of Representatives Financial Services Committee.
The hearing was postponed because of heavy snow that shut
down transportation in Washington but the Fed decided to go
ahead and make Bernanke's testimony public. []
Greek bank shares <.FTATBNK> gained 4.3 percent while yield
spreads between Greek bonds and German bunds tightened.
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC 40 <> ended the day between 0.4
and 0.7 percent higher.
Wall Street was lower around the time European bourses were
closing. The Dow Jones <>, S&P 500 <.SPX> and Nasdaq
Composite <> were down between 0.6 and 0.7 percent. The Dow
made its biggest percentage gain in three months on Tuesday.
INSURERS GAIN
Fortis <FOR.BR> rose 6.1 percent after Royal Bank of
Scotland (RBS) upgraded the stock to "buy" from "hold" and as
investors' expectations of a European rescue for Greece grows.
"Fortis is more exposed to Greek, Italian, Portuguese and
Spanish government debt than any other Benelux insurer. As such,
its share price has suffered from the recent market turmoil,"
RBS analyst Thomas Nagtegaal said in a note to clients.
Other insurers that rebounded included Aviva <AV.L>, AXA
<AXAF.PA>, Legal & General <LGEN.L>, Hanover Re <HNRGn.DE> and
Prudential <PRU.L>, up between 2.9 and 5 percent.
Oil majors gave up some of their gains after Bernanke's
remarks, as the dollar strengthened, hurting crude prices
<CLc1>, which fell to below $73.
However, BP <BP.L> and Total <TOTF.PA> rose 1.1 and 1
percent, respectively.
On the downside, ArcelorMittal <ISPA.AS>, the world's
biggest steelmaker, fell 6.9 percent. It forecast higher
shipments but lower prices in the first three months of 2010 and
a core profit that could fall from a fourth-quarter figure that
just missed expectations. []
Norwegian solar equipment maker Renewable Energy Corp
<REC.OL> slumped 19.9 percent as analysts said weak wafer prices
hurt the 2010 outlook.
And some financials were also weak. Swedish banks SEB
<SEBa.ST> and Nordea <NDA.ST> fell 4.4 and 2.1 percent,
respectively, as fourth-quarter results came in below
expectations. [] []
On the macroeconomic front, The Bank of England forecast
that British inflation would stand well below the 2 percent
target in two years' time if interest rates rose as fast as
markets predict. []
(Editing by Karen Foster)
