European shares advance; highest closing since Oct

                                
 * FTSEurofirst 300 hits highest closing in over 10 months
                                
 * Financials, commodity shares among top gainers
                                
 * Pharma shares slip as investors shift to cyclicals
                                
 By Atul Prakash
                                
 LONDON, Aug 24 (Reuters) - European shares hit their highest
closing level in more than 10 months on Monday, boosted by banks
and miners, with recent economic data and positive comments from
some central banks prompting investors to grab risky assets.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
ended 0.9 percent up at 975.19 points, the highest closing level
since early October. The index is up 17 percent this year and
has surged 51 percent from a record low in March.
                                
 Banks were among top gainers, with the DJ STOXX banking
index <.SX7P>, which has jumped 52 percent this year, rising 1.8
percent on Monday. Standard Chartered <STAN.L>, Barclays
<BARC.L>, Lloyds <LLOY.L>, Royal Bank of Scotland <RBS.L> and
Societe Generale <SOGN.PA> rose 1.5-6.8 percent.
                                
 "Economic data is in favour of a stronger recovery than
expected. We can be quite bullish on risky assets," said Romain
Boscher, head of equity management at Groupama Asset Management.
                                
 "Inflows will be in favour of equities and outflows will
come from money markets. This should last at least for several
more weeks, especially with a lot of investors coming back from
holidays and jumping on the bandwagon," he added.
                                
 Sentiment improved after data showed Euro zone industrial
new orders rebounded more than expected in June. The figures
followed a survey on Friday showing sales of previously owned
U.S. homes jumped 7.2 percent in July to mark the fastest pace
in nearly two years. [ID:nLO524595] [ID:nN21378170] 
                                
 Comments from U.S. Federal Reserve chairman Ben Bernanke
also added to optimism. He said on Friday that the prospects for
a return to growth in the near-term appeared good, although the
recovery was likely to be "relatively slow". [ID:nN2139655].
                                
 Miners got strength from higher metals prices, which jumped
on bets that the economic crisis was coming to an end. BHP
Billiton <BLT.L>, Anglo American <AAL.L>, Antofagasta <ANTO.L>,
Rio Tinto <RIO.L>, Xstrata <XTA.L> and ENRC <ENRC.L> rose
3.3-5.3 percent.
                                
 "While the occasional dissenting voice is still heard amidst
the bullish discourse surrounding this latest rally, more and
more naysayers appear to be jumping on the recovery bandwagon,"
said Tim Hughes, head of sales trading at IG Index.
                                
 "With the optimism today extending from Asia, through Europe
and -- in early trading at least -- on to Wall Street, further
gains seem pretty likely in the medium-term."
                                
 
                                
 RISK APPETITIE GROWS 
                                
 Investors have been shifting money into equities, generally
seen as risky assets compared to bonds, for better returns and
analysts said the trend was expected to remain in the near term.
                                
 "The combination of positive growth impulse, expected
recovery of the 12M forward earnings estimates and moderate
valuation suggests that the uptrend on the equity market will
continue," UniCredit strategists said in a note.
                                
 Credit default swap indexes sharply fell, indicating a rise
in risk appetite in Europe. The Markit iTraxx Crossover index
<ITEX05Y=GF>, made up of 44 mostly "junk"-related credits, fell
21.5 basis points to 581.5.
                                
 The VDAX-NEW volatility index <.V1XI> was at 27.57, down
from 33.08 a week ago when it rose 14 percent. The lower the
index, which is based on sell- and buy-options on Frankfurt's
top-30 stocks <0#.GDAXI>, the higher the appetite for risky
assets.
                                
 Energy shares were in demand as crude oil <CLc1> prices rose
0.9 percent on expectations that an economic recovery will spur
a rebound in energy demand. BP <BP.L>, Royal Dutch Shell
<RDSa.L>, BG Group <BG.L>, Tullow Oil <TLW.L>, Repsol <REP.MC>,
Total <TOTF.PA> and StatoilHydro <STL.OL> added 0.1-2.1 percent.
                                
 But British gas producer BG Group <BG.L> fell 2 percent
after it said a well it and partner Petrobras <PETR4.SA> drilled
offshore Brazil did not contain hydrocarbons despite an initial
examination suggesting gas could be present. [ID:nWLA1734]
                                
 Drugmakers, traditionally seen as defensive stocks, lost
ground as investors switched to cyclical shares. GlaxoSmithKline
<GSK.L>, Novo Nordisk <NOVOb.CO>, Roche Holding <ROG.VX> and
Shire <SHP.L> fell between 0.2-1.3 percent.
                                
 Nokia <NOK1V.HE> rose 1.7 percent. The world's top cellphone
maker said it would start to make laptops, entering a fiercely
competitive, but fast-growing market. [ID:nLO545102]
 (Additional reporting Brian Gorman; Editing by Jon
Loades-Carter)