* FTSEurofirst 300 ends 2.2 percent higher
* Australia's rate hike boosts recovery hopes
* Banks among top gainers; record high gold helps metals
By Atul Prakash
LONDON, Oct 6 (Reuters) - European shares ended sharply
higher on Tuesday, boosted by financials and oils, as investors
flocked into the market after Australia's move to raise rates
revived expectations of a global economic recovery.
Record high gold prices and stronger base metals helped
miners to record substantial gains ahead of the U.S. earnings
season, which starts on Wednesday with aluminium giant Alcoa
<AA.N> announcing its financial results.
The FTSEurofirst 300 <> index of top European shares
closed 2.2 percent higher at 992.76 points after rising 0.8
percent on Monday on stronger-than-expected U.S. service sector
data. The index, which slumped 45 percent last year, is up 19
percent in 2009 and has surged 54 percent since March lows.
Financial stocks were among the top gainers, with Standard
Chartered <STAN.L>, HSBC <HSBA.L>, Barclays <BARC.L>, Lloyds
<LLOY.L>, Royal Bank of Scotland <RBS.L>, BNP Paribas <BNPP.PA>,
Societe Generale <SOGN.PA>, KBC Groep <KBC.BR> and Credit
Agricole <CAGR.PA> rising between 1.6 and 15.4 percent.
"Yesterday we saw positive ISM data which came in much
higher than expected and gave some reassurance regarding the
economic recovery, after we had seen some disappointments in
macro figures at the end of last week," said Tammo Greetfeld, an
equity strategist at UniCredit in Munich.
"Australia raising interest rate could mean the authorities
judge the recovery to be stable enough to allow for a lessening
of monetary stimulus."
Australia's central bank raised its key cash rate by 25
basis points to 3.25 percent and heralded more to come, saying
it was safe to row-back on stimulus now that the worst danger
for the economy had passed. []
Improved market conditions prompted French bank Societe
Generale <SOGN.PA> to launch a 4.8 billion-euro ($7.0 billion)
rights issue to repay state support and fund takeovers, a week
after BNP Paribas <BNPP.PA> made a similar move to tap its
investors for 4.3 billion euros.
Miners surged as spot gold <XAU=> hit a record high above
$1,040 an ounce on a weaker dollar. BHP Billiton <BLT.L>, Anglo
American <AAL.L>, Antofagasta <ANTO.L>, Xstrata <XTA.L> and
Eurasian Natural Resources <ENRC.L> surged 4.6 to 7.6 percent.
Rio Tinto <RIO.L> surged 6.9 percent after Mongolia finally
wrapped up a deal to develop one of the world's biggest untapped
copper and gold deposits, signing off on Rio and Ivanhoe Mines'
<IVN.TO> $3 billion Oyu Tolgoi mine. []
OILS POWER ENERGY SHARES
Energy shares were in demand after crude prices <CLc1> rose
1.7 percent to trade above $71 per barrel as the dollar slipped
against major currencies and after a U.S. government agency
raised its forecast of world oil demand for the fourth quarter.
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 between 1.7 percent and 8.4 percent.
"The recent decline has presented yet another buying
opportunity for investors," said Angus Campbell, head of sales
at Capital Spreads.
"Throughout this equity market recovery, each small
retracement has been met by a flurry of buying and just when the
bull run looks to be over, it takes another step up the ladder."
However, Tesco <TSCO.L>, the world's third-biggest retailer,
fell 0.2 percent. It posted a first-half profit towards the top
end of forecasts, but its second-quarter performance was nearer
the bottom end of estimates. []
Across Europe, Britain's FTSE 100 index <>, Germany's
DAX <> and France's CAC 40 <> rose 2.3 to 2.7
percent.
Some analysts advised caution.
"It may have been another bumper session but it's worth
noting that these latest gains have been driven by some very
specific events," said Anthony Grech, strategist at IG Index.
"And with the Q3 earnings season 'officially' starting
tomorrow in the U.S., a broad reversion certainly can't be
discounted."
(Editing by Karen Foster)
