* FTSEurofirst 300 surges 6 pct
* Financials surge on likely U.S. govt solution
* Commodities rise; higher crude, metals prices also help
By Atul Prakash
LONDON, Sept 19 (Reuters) - European shares soared on
Friday, led by recently battered insurers and banks boosted by a
UK ban on short-selling financial stocks and hopes for a
comprehensive U.S. government solution to bad banking assets.
By 0849 GMT, the FTSEurofirst 300 index of top European
shares was up 6 percent at 1,127.58 points, recouping some of
the sharp losses from earlier in the week. The benchmark is
still down about 3.5 percent this week and has fallen 26 percent
so far in 2008.
The UK Financial Services Authority imposed a temporary ban
on short-selling financial stocks on Thursday and the top U.S.
securities regulator was said to be weighing a similar measure
in a bid to stabilise stock prices. []
Shares in Royal Bank of Scotland <RBS.L>, Barclays <BARC.L>,
Lloyds TSB <LLOY.L> and <HBOS.L> in Britain all jumped more than
32 percent after the ban on short-selling.
Banks were the biggest weighted sectoral gainer on the
index, with Dexia <DEXI.BR> surging 19.8 percent, Credit
Agricole <CAGR.PA> advancing 19.5 percent, Fortis <FOR.BR>
jumping 12 percent and BNP Paribas <BNPP.PA> gaining 11.5
percent.
Anglo Irish <ANGL.I> soared 41 percent and Bank of Ireland
<BKIR.I> jumped 34 percent. The DJ Stoxx Banks index <.SX7P> was
up 15 percent.
Markets across the globe spiked after a congressional aide
said on Thursday that U.S. Treasury Secretary Henry Paulson had
been shopping around a proposal to congressional lawmakers that
would create an entity to deal with the billions of dollars of
bad debt still clogging the financial system.
The idea has been compared to the Resolution Trust Corp
formed in 1989 to fix the savings and loan industry collapse.
"At present, confidence is the most important factor, and
this will only be maintained if the rescue plans are delivered
on both sides on the Atlantic," said Andrew Turnbull, senior
sales manager at ODL Securities.
Across Europe, Britain's FTSE <> rose 6.9 percent,
Germany's DAX <> gained 4.3 percent, and France's CAC
<> rose 6.1 percent.
"It is likely that we will see a volatile day as measures
are brought in to restrict such short selling, and I would
imagine that the quarterly options expiry could add further
volatility to the situation," said Turnbull.
HSBC DROPS OFFER
Shares in HSBC <HSBA.L> rose 13 percent. The bank dropped a
$6.3 billion offer for 51 percent of Korea Exchange Bank
<004940.KS>, blaming turmoil in financial markets and ending
what would have been the biggest cross-border deal in South
Korea's bank sector. []
Spain's top bank Santander <SAN.MC> rose 8.4 percent. It
declined to comment on media reports it was eyeing Bank of
Ireland <BKIR.L>. A spokesman for Santander also declined to
comment on a report on the Financial Times website that it was
considering bidding for U.S. bank Washington Mutual <WM.N>.
Insurers also spiked, with Aviva <AV.L> rising 19 percent,
Old Mutual <OML.L> up 24 percent and Prudential <PRU.L> up 15
percent.
Mining stocks gained on a broad recovery in the market, and
tracking a rise in metals prices.
BHP Billiton <BLT.L>, Anglo American <AAL.L>, Vedanta
Resources <VED.L>, Lonmin <LMI.L>, Kazakhmys <KAZ.L>, Xstrata
<XTA.L>, Antofagasta <ANTO.L> and Rio Tinto <RIO.L> rose between
0.9 and 13 percent.
A more than 1 percent jump in crude oil prices on U.S. and
Nigerian supply concerns supported energy stocks.
BP <BP.L>, gas producer BG Group <BG.L> and Tullow Oil
<TLW.L> added between 1.2 and 4 percent.
(Editing by Will Waterman)
