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Europe shares gain after U.S. GDP data; banks firm

Published 10/29/2009, 09:57 AM
Updated 10/29/2009, 10:00 AM
UK100
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BARC
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NWG
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SOGN
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KBC
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XTA
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RIO
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AAL
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BG
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ANTO
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ENI
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TGT
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* FTSEurofirst 300 up 1.2 percent, jumps after U.S. data

* Financial stocks among top gainers, KBC jumps 15.6 percent

* Energy shares under pressure; Shell, Eni results weigh

* For up-to-the-minute market news, click on

By Atul Prakash

LONDON, Oct 29 (Reuters) - European shares climbed on Thursday, led by financials and miners, after data showed the U.S. economy grew in the third quarter for the first time in a year, unofficially ending the worst recession in 70 years.

In its first estimate of third-quarter gross domestic product, the Commerce Department said the economy grew at a 3.5 percent annual rate, the fastest pace since the third quarter of 2007. It contracted 0.7 percent in the April-June period.

The market also got support from figures showing the number of U.S. workers filing new claims for jobless benefits dipped by 1,000 last week, while the number collecting long-term aid fell to the lowest reading in seven months as the job market steadied.

At 1324 GMT, the FTSEurofirst 300 index of top European shares was up 1.2 percent at 991.88 points after hitting a three-week low of 974.50 earlier in the session.

The index, which slumped 45 percent last year, is up 19 percent in 2009 and has surged 52 percent since hitting a record low in early March.

"The U.S. authorities used every weapon in their arsenal to make sure that the recession didn't turn into a depression," said Henk Potts, equity strategist at Barclays Wealth.

"The economy quickly rebounded with growth into the third quarter. It's positive for the world's largest economy and obviously good news in terms of macro expectations and equity prices," he added.

Financial stocks were among the top gainers, with Standard Chartered, HSBC, Barclays, Lloyds, Royal Bank of Scotland, BNP Paribas and Societe Generale rising between 0.8 and 10.4 percent.

Belgium's KBC surged 15.6 percent after tumbling for three straight sessions following ING's announced capital increase and the spin-off of its insurance business.

The EU-imposed break-up and retrenchment of Dutch ING sparked fears that others could face tougher-than-expected sanctions in return for state aid, sending shares sharply lower earlier this week. ING shares rose 7.4 percent.

Miners derived strength from higher metals prices. BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources rose 2.3-5.4 percent.

But energy shares were under pressure after oil majors Royal Dutch Shell and Eni warned of a slow recovery, highlighting weak energy demand and operational challenges, as their profits slumped.

Shell, Europe's largest oil company by market value, said it was cutting 5,000 jobs to tackle the tough economic environment.

Its shares were down 3.5 percent.

Eni fell 1.9 percent after it said European demand for gas and fuels would continue to shrink, and said it was cutting its production target for the year. BG Group was down 1.3 percent.

Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 rose 0.6-1.3 percent. (Editing by Will Waterman)

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