By Amanda Cooper
LONDON, March 27 (Reuters) - European shares rose to their
highest close in two weeks on Thursday after the region's three
biggest central banks committed to pumping extra liquidity into
money markets, lifting financial stocks.
Banks were the top positive influence on the broader
European equity market after the central banks of Britain and
Switzerland promised extra funds to ease pressure on interbank
lending rates, while the European Central Bank said it was ready
to step in with extra cash if needed.
HSBC <HSBA.L> gained 1.1 percent, while Banco Santander
<SAN.MC> rose 1.7 percent and HBOS <HBOS.L> and Natixis
<CNAT.PA> gained around 3 percent.
Gains were tempered by the technology sector. U.S. group
Oracle <ORCL.O> missed Wall Street expectations on Wednesday,
hitting shares in German software group SAP <SAPG.DE>.
SAP fell nearly 5 percent after Oracle said its customers
had become more cautious, dealing a blow to the idea that
software companies would be immune to the turmoil rocking
markets.
The FTSEurofirst 300 <> index of top European shares
was up 1 percent at 1,271.59 points, a level last seen on March
14.
"The market is still very, very jittery but I think it wants
to believe that the central banks can solve the problem," said
Andrew Lynch, a portfolio manager at Schroders.
"We're going to remain very data-dependent, very
event-dependent so if we see unemployment really accelerate in
the States, if we see consumer confidence in Europe, which has
remained remarkably high, start to crack, then I think the
market goes down again."
Tighter European credit spreads also added to the positive
undertone within the financial sector [], even as
three-month interbank lending rates for euros and sterling hit
their highest levels this year <LIBOR>.
BANKING SECTOR
The DJ Stoxx bank index <.SX7P> was up 1.5 percent. The
index is still down about 35 percent since reaching a peak last
April as financial stocks have come under pressure from
writedowns in the banking sector linked to products exposed to
the risky U.S. subprime mortgage market.
Mining shares rose as copper and other base metal prices
rose. Rio Tinto <RIO.L> was up 2.1 percent, while Anglo American
<AAL.L> and BHP Billiton <BLT.L> both gained 1.6 percent.
French mining group Eramet <ERMT.PA> was up 1.6 percent,
after earlier surging more than 5 percent. Traders said it was
seen as a potential takeover target after bid talks collapsed
between Brazil's Vale <RIO.N><VALE5.SA> and Xstrata <XTA.L>.
Strong results propelled retailer Hennes & Mauritz <HMb.ST>,
insurer Swiss Life <SLHN.VX> and Austrian bank Raiffeisen
<RIBH.VI>.
German property lender Hypo Real Estate <HRXG.DE> soared 14
percent on relief over its exposure to monoline insurers.
"We are not seeing a dramatic impact on the non-financial
sector yet, outside the U.S., from current woes. If that
continues to be the case, then investors will begin to pay for
the earnings that they see developing," said John Haynes,
strategist at Rensburg Sheppard Investment Management.
"But at the moment everybody is a bit too nervous to trust
that the current consensus forecasts are accurate because they
fear that they will be coming down shortly as the financial
issues spill over into them."
The FTSEurofirst 300 has lost about 15 percent so far this
year and is on track to record its worst quarterly performance
since the third quarter of 2002, on concern about the extent of
the impact of the credit crisis on the U.S. economy.
A final reading of U.S. quarterly GDP data confirmed growth
slowed to an annual pace of just 0.6 percent in the fourth
quarter of 2007.
Around Europe, London's FTSE 100 <> rose 1 percent,
Paris' CAC 40 <> added 0.9 percent, while Frankfurt's DAX
<> gained 1.4 percent.
(Additional reporting by Ana Nicolaci da Costa in London and
Blaise Robinson in Paris; editing by Sue Thomas)
