By Eva Kuehnen
FRANKFURT, March 12 (Reuters) - European shares rallied for
a second day in a row on Wednesday as optimism sparked by major
central banks' moves to ease credit market problems lifted
financial stocks, while bid talk pushed mining shares higher.
Among major movers, UK insurer Standard Life <SL.L> jumped
12.9 percent after it beat forecasts with a 43 percent rise in
2007 profit.
The pan-European FTSEurofirst 300 index <> closed 1.2
percent higher at 1,284.81 points, having hit its intra day high
at 1,296.05 points.
The index has gained almost 2 percent this week as mainly
financial stocks recovered, having borne the brunt in recent
market falls, stemming from a crisis in the U.S. subprime
mortgage market.
The index has lost almost 15 percent so far this year.
Major U.S. stock indexes, which jumped more than 3 percent
on Tuesday after a coordinated central bank move to add billions
of dollars of liquidity to struggling credit markets, were also
higher.
"The worst fears are temporarily taken out of the market,
but this doesn't solve the problem in the long term," said
Markus Steinbeis, head of European equities at Pioneer
Investments in Munich.
The rally was very much technically driven, he added, which
was reflected in the sector allocation.
Beaten-down financial and insurance stocks rose while recent
defensive favourites such as telecom stocks and utilities lost.
"It was more a short covering," Steinbeis said, which was
why banks and insurers in particular gained.
"It wouldn't be surprising if such a move lasted for a
while. We have to wait and see in order to evaluate this, to see
whether this is just a flash in the pan," Steinbeis said.
Banks were the major gainers in Europe and the DJStoxx index
of European banking shares <.SX7P> rose 2.4 percent.
UBS <UBSN.VX>, Societe Generale <SOGN.PA>, Credit Suisse
<CSGN.VX> were among the strongest positive influences on the
European benchmark index, each gaining about 6 percent.
La Tribune newspaper reported BNP Paribas <BNPP.PA> could
set out terms for any offer for SocGen, its embattled rival, in
May. A BNP Paribas spokesman declined to comment on the report.
BNP Paribas shares were up 2.3 percent.
MINING STOCKS RISE
Bid talk boosted shares in Kazakhmys <KAZ.L>, the world's
10th biggest copper producer, up almost 16 percent after Kazakh
mining group Eurasian Natural Resources <ENRC.L> said it held
preliminary talks about buying its rival.
The DJ Stoxx European basic resources index <.SXPP> was up
2.7 percent with BHP Billiton <BLT.L> rising 5 percent, Rio
Tinto <RIO.L> adding 3.6 percent and Antofagasta <ANTO.L> up 5
percent.
Oil majors such as BP <BP.L>, Royal Dutch Shell <RDSa.AS>
and Total <TOTF.PA> rose as oil prices <CLc1> steadied near a
record high of $109.72 a barrel.
Elsewhere, shares in Spanish real estate firm Colonial
<COL.MC> jumped 15.3 percent. Investment Corporation of Dubai
(ICD) said it reached an agreement to acquire 50.4 percent in
the company.
On the downside, Germany's Celesio <CLSGn.DE> fell 4.5
percent after Europe's biggest drug distributor said it expects
a lower pre-tax profit this year.
(Editing by Elaine Hardcastle)
