* FTSEurofirst 300 up 0.9 pct to near one-week closing high
* Oil majors among top gainers; BP rises
* FOMC meeting minutes eyed for Fed's outlook on recovery
By Harpreet Bhal
LONDON, Jan 4 (Reuters) - European shares hit their highest
closing level in nearly a week on Tuesday, with oil majors
contributing to the bulk of gains as commodity prices were
boosted by strong manufacturing data from around the world.
The pan-European FTSEurofirst 300 <> index closed 0.9
percent higher at 1,142.01 points, with Britain's FTSE 100
<>, which has a large proportion of commodity shares,
rising 1.9 percent on its first trading day of the year.
Commodity stocks were buoyed by upbeat demand expectations
following reassuring manufacturing data from China, the United
States and Europe, with the STOXX Europe 600 oil and gas index
<.SXEP> up 2.5 percent as crude prices <CLc1> hovered near a
27-month high before later paring gains.
"It has been a great start to the year kicked off by
commodity stocks but I think the markets could start to slow a
bit. European debt problems are going to be the major story that
will put us in a risk-off trade," said James Hughes, market
analyst at CMC Markets.
BP <BP.L> climbed almost 6 percent and earlier hit a
six-month high after the Daily Mail newspaper reported rival
Royal Dutch Shell <RDSa.L> considered a takeover bid, and as
investors were reassured by comments that suggested damages from
its oil spill could be half the expected level. []
Within the sector, BG Group <BG.L> added 2.7 percent while
Total <TOTF.PA> was up 1.3 percent.
PATH TO RECOVERY
Adding to the upbeat view on the pace of economic recovery
following the strong manufacturing figures in the previous
session, data showed new orders received by U.S. factories
unexpectedly rose in November, and orders excluding
transportation recorded their largest gain in eight months.
[]
Analysts said recent gains in equities reflected improving
sentiment towards the prospects for the global economy.
"The U.S. is now going to take the lead in the global
economy, helped by a very loose policy," said Mike Lenhoff,
chief strategist at Brewin Dolphin.
"Confidence has been boosted considerably because of the
support that the policy has been providing. If they are
successful in doing that, that is a good news for the global
economy and for corporate earnings."
Investors will scour the minutes of the Federal Open Market
Committee's meeting from Dec. 14, for an insight into the U.S.
central bank's outlook on the economy. The minutes are due at
1900 GMT, after European markets close.
Appetite for risky assets rose, with the VDAX-NEW volatility
index <.V1XI> falling 3 percent. The lower the index, the higher
the market's desire to take risk.
Banks, seen as a barometer for risk, were among the gaining
sectors. Barclays <BARC.L>, Societe Generale <SOGN.PA> and
Deutsche Bank <DBKGn.DE> rose 2.4 to 4.2 percent.
On the downside, Piraeus Bank <BOPr.AT>, Greece's
fourth-largest lender, fell 11.8 percent after saying it will
issue new shares to raise 807 million euros ($1.06 billion) to
boost its balance sheet and cope with the Greek debt crisis.
[]
Other fallers included watchmaker Swatch Group <UHR.VX>,
which shed 3.1 percent as concerns about the impact of the
strong Swiss franc weighed on the stock.
(Additional reporting by Atul Prakash; Editing by David Cowell)
