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European shares extend gains; eyes on ECB measures

Published 12/02/2010, 05:17 AM
Updated 12/02/2010, 05:20 AM

* FTSEurofirst 300 rises 0.8 percent

* Miners, banks extend gains

By Brian Gorman

LONDON, Dec 2 (Reuters) - European shares rose early on Thursday, building on strong gains in the previous session, with investors expecting the European Central Bank (ECB) to announce new measures to tackle the euro zone debt crisis.

At 0945 GMT, the FTSEurofirst 300 index of top European shares was up 0.8 percent at 1,097.58 points. The index rose 2.1 percent on Wednesday, its biggest one-day percentage gain in three months.

Heavyweight miners were among gainers on Thursday as metals prices rose, having been boosted in recent days by strong manufacturing data from China and Germany. Anglo American, BHP Billiton and Rio Tinto rose between 1.5 percent and 2 percent.

At 1245 GMT, the ECB is likely to say it is keeping a key interest rate on hold at 1 percent.

Also on Thursday, the ECB, under pressure to help the euro zone contain a crippling debt crisis, is expected to announce new anti-crisis measures, such as expanding its government bond buying or the size of the European Financial Stability Facility.

"What we suspect the ECB will decide upon is to provide further facilities to buy in bonds when needs require," David Buik, senior partner at BGC Partners, said in a note.

Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin, said: "The debt crisis is the only thing stopping the market breaking higher. Economic data from the States is increasingly reassuring."

U.S. private-sector payrolls achieved their biggest gain in three years, according to ADP data released on Wednesday.

Spanish banks, some of which have exposure to Portugal -- tipped as the next country to follow Ireland in requiring a bailout -- extended sharp gains from the previous session.

Banco Santander and BBVA rose 3.3 and 3.6 percent respectively.

"The most important point is the credibility of these (euro zone peripheral) countries and for them to become fiscally sustainable in the relevant time horizon -- and there's a parallel banking system issue, as we've seen in Ireland," said McAlinden.

Auto stocks advanced, after U.S. auto sales rose 17 percent in November from a year earlier, indicating a slow but steady return in consumer demand from depressed levels of a year ago.

Porsche, BMW, Daimler, Renault, Peugeot and Volkswagen rose between 2.1 percent and 3.8 percent, extending day-earlier gains triggered by an upbeat Nomura note on the sector.

Britain's FTSE 100, Germany's DAX and France's CAC40 rose between 0.5 and 1 percent.

The Thomson Reuters Peripheral Eurozone Countries Index was up 2.2 percent.

TNT POSTS GAIN

Dutch mail and logistics firm TNT rose 5.2 percent after detailing the planned separation of its Express activities from its mail activities and saying it would keep a 29.9 percent stake in the Express unit.

Roll-Royce fell 1 percent after Qantas stepped up pressure on the engine maker to settle damages related to an engine failure on one of its giant Airbus A380 aircraft, but said it would keep the door open for an out-of-court settlement.

Later in the session, investors' focus will turn to U.S. pending home sales and weekly jobless data, for indications of the strength of recovery in the world's biggest economy. (Editing by David Hulmes)

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