* FTSEurofirst 300 index up 0.9 pct
* Banks, commods gain
* Drugmakers fall
By Joanne Frearson
LONDON, Aug 24 (Reuters) - European shares rose in early
trade on Monday, hitting their highest level in more than 10
months, with banks and commodity stocks gaining as investors
become more confident about the prospects of a global recovery.
By 0818 GMT, the pan-European FTSEurofirst 300 <>
index of top shares was up 0.9 percent at 975.49 points, having
hit a 10-month high of 977.93 points earlier.
The index is up around 50 percent since reaching a lifetime
low in early March and is up about 17 percent for the year.
"There are no specific stories out there, there is no good
news and no bad news. Asian markets were ok overnight and the
outlook for the U.S. looks reasonable so there is not reason for
Europe to take the top off," said Howard Wheeldon, strategist at
BGC Partners.
Banks added the most points to the index. Barclays <BARC.L>,
UniCredit <CRDI.MI>, UBS <UBSN.VX> and Lloyds Banking Group
<LLOY.L> were up 1.8 to 3.8 percent.
Miners tracked higher metal prices with copper <MCU3=LX>
gaining 1.4 percent, aluminium <MAL3=LX> up 1.1 percent and
nickel <MNI3=LX> up 3.5 percent on a brighter economic outlook.
Anglo American <AAL.L>, Antofagasta <ANTO.L>, BHP Billiton
<BLT.L>, Eurasian Natural Resources Corporation <ENRC.L>, Rio
Tinto <RIO.L> and Xstrata <XTA.L> were 2.8 to 4.4 percent
higher.
Energy stocks were higher as crude <CLc1> rose above $74 a
barrel extending its rally to trade near a 10-month high.
BG Group <BG.L>, Cairn Energy <CNE.L>, Royal Dutch Shell
<RDSa.L>, Total <TOTF.PA> and Tullow Oil <TLW.L> were up 1.2 to
2.6 percent.
DEFENSIVES FALL
On the downside, defensive stocks were lower as investors
switched into cyclicals.
Drugmakers were among the biggest losers on the index with
Roche <ROG.VX> and Sanofi-Aventis <SASY.PA> both down 0.5
percent.
Turning to economic news, markets were given further support
as European Central Bank Governing Council Member Ewald Nowotny
said over the weekend that the European economy will improve in
the second half, driven by policy measures, but a sustained
recovery will likely not take hold until the beginning of 2010.
[]
But Nouriel Roubini, one of the few economists who
accurately predicted the magnitude of the world's financial
troubles, sees a "big risk" of a double-dip recession, according
to an opinion piece posted on the Financial Times website on
Sunday. []
"Markets have been reflecting the government stimulus around
the world and getting far too excited. ... Not sure if this is
going to be sustainable as we head up towards the (UK) bank
holiday weekend," said Justin Urquhart Stewart, director at
Seven Investment Management.
"We have to be extremely careful of the market getting too
carried away and investors losing track of valuations," he said.
Meanwhile, euro zone industrial new orders, due out at 0900
GMT, will provide a further gauge on the state of the region's
economic picture. Investors will also keep an eye on Chicago Fed
Index for July, due at 1230 GMT, and U.S. Midwest manufacturing
data, which will be released at 1600 GMT.
Across Europe, the FTSE 100 <> index was up 0.9
percent, Germany's DAX <> was 0.9 percent higher and
France's CAC 40 <> was up 0.8 percent.
(Editing by Erica Billingham)
