* FTSEurofirst 300 rises 1 pct; highest close since Oct 2008
* Banks among top gainers; sector index rises 1.9 pct
* Investor appetite for risk grows; volatility index down
By Atul Prakash
LONDON, March 25 (Reuters) - European equities ended at
their highest level in nearly 18 months on Thursday, boosted by
banking shares, as hopes for a solution for Greece's fiscal
problems and soothing U.S. economic figures improved sentiment.
A pledge by Dubai's government to support the restructuring
of debt-laden state-owned firms Dubai World and Nakheel by
providing $9.5 billion in new funding also provided some relief.
[]
The FTSEurofirst 300 <> index of top European shares
finished 1 percent higher at 1,083.34 points, the highest close
since early October 2008. The index is up 3.6 percent this year
and has jumped 67 percent since hitting a record low in March
last year.
Financial stocks were among the top gainers, with STOXX
Europe 600 banking index <.SX7P> rising 1.9 percent. Standard
Chartered <STAN.L>, HSBC <HSBA.L>, Barclays <BARC.L>, Lloyds
<LLOY.L>, BNP Paribas <BNPP.PA>, Societe Generale <SOGN.PA>,
Credit Agricole <CAGR.PA> and Bank of Ireland <BKIR.I> rose 1.1
to 6.5 percent.
Royal Bank of Scotland <RBS.L> rose 2.5 percent. The bank
unveiled a plan to restructure up to 15.8 billion pounds ($23.57
billion) of debt in a balance sheet overhaul that will generate
a 1.25 billion pound gain for the bailed-out bank.
[]
The leaders of Germany and France clinched agreement on a
joint European-IMF financial safety net for debt-stricken Greece
just before an EU summit on Thursday, the French president's
office said. []
The accord, which set the stage for a wider deal among euro
zone leaders, is intended to reassure nervous financial markets
and arrest a crippling rise in Greece' borrowing costs after a
debt crisis that has shaken confidence in the euro.
"We need to find a solution (for Greece), which is not only
viable for the short run but also viable for the medium- and
longer-term," said Klaus Wiener, head of research at Generali
Investments.
"We learnt from Lehman Brothers that the cost of cleaning up
the mess after such an event is much higher than the cost of
finding a solution," he added, referring to the collapse of the
U.S. investment bank.
The European stock market was also supported by data showing
the number of U.S. workers filing new applications for
unemployment insurance fell sharply last week, boosting hopes of
a recovery in the labour market. []
VOLATILITY INDEX FALLS
Investor appetite for risky assets such as equities rose,
with the VDAX-NEW volatility index <.V1XI> falling 2.7 percent.
The lower the index, which is based on sell and buy options on
Frankfurt's top-30 stocks <0#.GDAXI>, the higher the market's
desire to take risk.
Across Europe, Germany's DAX <> rose 1.6 percent,
France's CAC 40 <> was up 1.3 percent, while Britain's FTSE
100 index <> ended 0.9 percent higher.
"With the index (FTSE) now pushing beyond a 21-month high,
traders will be looking to call this latest rally's peak and we
may see a slowdown, if not a sell-off, in the short-term," said
Philip Gillett, a sales trader at IG Index.
"If we continue to see upbeat news hitting the wires and if
investors can hold their nerve in the face of these increasingly
vertiginous heights, there's no reason to suggest the index
won't continue its impressive recovery."
Utility stocks also rose, with British water company United
Utilities <UU.L> rising 2.8 percent. It said it expected a sound
performance for the current financial year thanks to the low
cost of financing. GDF Suez <GSZ.PA> and E.ON <EONGn.DE> gained
2.6 and 1.9 percent, respectively. []
Miners got strength from higher metal prices, which rose on
signs of a pick up in demand. BHP Billiton <BLT.L>, Anglo
American <AAL.L>, Antofagasta <ANTO.L>, Rio Tinto <RIO.L> and
Xstrata <XTA.L> rose 0.1 to 1.2 percent.
Volkswagen <VOWG_p.DE> fell 3.5 percent. The carmaker on
Tuesday launched Germany's biggest ever rights issue, seeking to
raise around 4 billion euros ($5.4 billion) to finance
acquisitions and defend its credit ratings. []
(Editing by Karen Foster)
($1=.6702 Pound)
