Banks lead Europe shares up; U.S. data bring cheer

                                
 * FTSEurofirst 300 up 1.6 pct, adding to Tuesday's gains
                                
 * Banks lead advance, tracking Wall Street trend
                                
 * Crude oil price fall hits energy stocks
                                
 
                                
 By Peter Starck
                                
 FRANKFURT, April 1 (Reuters) - European shares rose for the
second straight day on Wednesday, buoyed by banks such as ING
Group <ING.AS> and Barclays <BARC.L> which took their cue from
U.S. financials after economic data that raised hopes of a
recovery.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed 1.6 percent higher at 745.14 points, clawing back
intra-day losses of as much as 1.8 percent.
                                
 The late afternoon rally tracked a similar Wall Street swing
into positive out of negative territory on the back of U.S.
manufacturing and home sales data.
                                
 The U.S. Institute for Supply Management (ISM) said its
index of national factory activity rose to 36.3 in March, above
economists' median forecast of 36.0, from 35.8 in February.
[ID:nN01486265]
                                
 "This gain is the third consecutive monthly increase ... the
recent months' stabilisation gives rise to the hope that the
worst contraction of the economy might be over," said
Commerzbank analyst Bernd Weidensteiner.
                                
 Separately, the U.S. National Association of Realtors said
its pending home sales index based on contracts signed in
February was up 2.1 percent. Economists polled by Reuters had
expected a 1.0 percent rise. [ID:nN19590716]
                                
 "Any signs of recovery will see the (stock markets) rally
show a bit of leg," said David Buik at BGC Partners.
                                
 "It may be choppy for the next three months but a strong
autumn rally cannot be ruled out. Banks look good," he said.
                                
 The European benchmark index is down 10.4 percent this year,
hit by the global economic downturn, but has risen 15.4 percent
since hitting an all-time low on March 9.
                                
 Tracking the Wall Street trend for financial stocks <.GSPF>,
banks <.SX7P> added most points to Europe's top-300 index and
notched up the best DJ Stoxx sectoral performance with a rise of
3.9 percent.
                                
 ING was up 8.4 percent, Barclays added 6.1 percent, Credit
Suisse <CSGN.VX> gained 5.9 percent and BNP Paribas <BNPP.PA>
put on 5.5 percent.
                                
 Vienna Insurance Group <VIGR.VI> surged 13.3 percent after
announcing a surprise bonus dividend on top of its regular
payout. [ID:nLV221662]
                                
 Also among the risers was Vodafone <VOD.L>, up 4.4 percent
after Goldman Sachs upgraded the stock to "buy" from "neutral"
and added it to its "conviction buy" list. The DJ Stoxx telecoms
index <.SXKP> gained 2.5 percent.
                                
 
                                
 FRAGILE SENTIMENT
                                
 Heinz-Gerd Sonnenschein, equity strategist at Germany's
Postbank, said market sentiment remained fragile.
                                
 "People are still very nervous," he said. "I don't think we
are on track for another upward bounce".
                                
 Worries about the fate of the U.S. auto industry, and the
implications for carmakers in Europe, were "hanging over the
market," Sonnenschein added. [ID:nL1176986]
                                
 Energy stocks were Europe's top losers, slammed by a 4
percent fall in oil prices <CLc1> after U.S. crude inventories
hit a 16-year high. [ID:nN01489681]
                                
 In the sector, Petroplus <PPHN.VX> sank 6.8 percent, Royal
Dutch Shell <RDSa.L> lost 2.5 percent, BP <BP.L> fell 2.2
percent and Total <TOTF.PA> eased 1.3 percent.
                                
 Among losers elsewhere, Lafarge <LAFP.PA> shed 5.8 percent
after the world's biggest cement maker launched a 1.5 billion
euro rights issue at a deep discount. [ID:nL1216745]
                                
 Looking at the meeting of Group of 20 world leaders in
London, Saxo Bank's chief equity strategist, Christian
Blaabjerg, said: "We should expect very little of real substance
from this summit that will immediately affect economic growth or
financial markets."
                                
 More in the focus on Thursday will be the European Central
Bank's (ECB) monetary policy meeting, amid consensus
expectations of a 50 basis point interest rate cut and hopes for
some non-conventional or so-called quantitative easing (QE) of
monetary easing on top.
                                
 "Further easing, via non-conventional measures is needed ...
after QE -- or some form of measures close to QE -- have been
implemented by the BoE, BoJ, Fed and SNB. We doubt the ECB
can stand alone for long as being the only central bank not
embracing some form of QE," UBS said in a research note.
 (Additional reporting by Blaise Robinson in Paris; Editing by
David Cowell)