* FTSEurofirst 300 up 2.6 pct, snapping a 3-day losing run
* SocGen's better-than-feared results sparked rally in banks
* Weak oil calms inflation fears, drags down energy stocks
By Blaise Robinson
PARIS, Aug 5 (Reuters) - European stocks gained on Tuesday
to snap a three-day losing streak thanks to a drop in oil prices
and better than feared results from Societe Generale <SOGN.PA>
that lifted banks ahead of a U.S. rate decision.
Oil-sensitive airline stocks were among the biggest gainers
as crude fell to a three-month low around $118 a barrel, calming
recent fears over inflation and corporate costs. Ryanair <RYA.I>
rose 11 percent and British Airways <BAY.L> added 5 percent,
while Air France-KLM <AIRF.PA>, which posted better than
expected earnings, gained 9.4 percent.
"It's really the fact that the oil price has gone below $120
a barrel, simple as that," says Neil Glynn, analyst at NCB
Stockbrokers in Dublin.
Danish brewer Carlsberg <CARLb.CO> soared 16 percent after
posting forecast-beating second-quarter earnings. The solid
results lifted shares in peers Heineken <HEIN.AS> 5.1 percent
and InBev <INTB.BR> 5.8 percent.
The FTSEurofirst 300 <> index of top European shares
closed up 2.6 percent at 1,182.31 points. The index is down 22
percent on the year.
"It's quite good news from Societe Generale but overall this
market rebound will be short-lived and I remain bearish on
stocks," said Christian Jimenez, president of Imene Investment
partners, in Paris.
"What you see on oil prices is a relatively excessive
correction as the tropical storm won't hit Texas, but it doesn't
mean fundamentals have improved. The retreat should not last
very long," he said.
"The impact from the U.S. economic slowdown, as well as from
downturns in Europe and in emerging markets, has not been
completely priced in. I think the market will move sideways for
a while, before revisiting recent lows."
France's Societe Generale <SOGN.PA> rose 9.4 percent after
posting a 63 percent fall in second-quarter net profit, hit by
losses at its corporate and investment banking unit, but the
results beat most analysts' expectations.
In a note to clients, Landsbanki Kepler noted that the
results highlighted a recovery in underlying revenue at the
bank's corporate and investment banking division despite the
current market conditions.
The DJ Stoxx banking index <.SX7P>, which remains down 29
percent on the year, surged 5.7 percent on Tuesday, with
Barclays <BARC.L> up 8.8 percent, Natixis <CNAT.PA> up 11
percent and HBOS <HBOS.L> up 12 percent.
Banks have been hit over the past year by the crisis in the
credit market that has forced financial institutions to unveil
massive asset writedowns related to bad debt.
Financials were also in the spotlight ahead of the interest
rate decision by the U.S. Federal Reserve, due after the
European market close. The U.S. central bank is expected to
leave its rates at 2 percent.
Howard Wheeldon, senior strategist at BGC Partners, is among
those who expected the Fed to leave rates on hold.
"I expect them to say that the risks of moving rates at this
stage are outweighed by the inflationary pressures which would
be created and that, whilst the economic situation remains on
the downside, there are some indications that concerns may have
somewhat reduced," he said.
Around Europe, Germany's DAX index <> gained 2.7
percent, UK's FTSE 100 index <> rose 2.5 percent and
France's CAC 40 <> added 2.5 percent.
European energy stocks were the big losers of the day,
falling along with oil prices. Total <TOTF.PA> lost 1.6 percent
and BP <BP.L> fell 1.1 percent.
(Additional reporting by Andras Gergely in Dublin and Patrizia
Kokot in London; Editing by Greg Mahlich)
