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European shares snap losing streak; TUI Travel up

Published 10/05/2010, 05:34 AM
Updated 10/05/2010, 05:36 AM
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* FTSEurofirst 300 index gains 0.5 percent

* TUI Travel gains after bookings rise

* Tesco rises after results beats forecasts

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

LONDON, Oct 5 (Reuters) - European shares regained ground on Tuesday after making their longest losing streak since January 2009, as sentiment about the global recovery improved, while TUI Travel jumped after bookings rose.

Investor confidence was given a boost after British private-sector services activity growth rose unexpectedly in September, while hopes that central banks will continue to take action to help a fragile recovery also supported.

The Bank of Japan said it may increase the size of a fund pool set aside for asset buying after it effectively cut interest rates to zero.

Separately Federal Reserve Chairman Ben Bernanke said on Monday further asset purchases could help ease financial conditions.

By 0914 GMT, the pan-European FTSEurofirst 300 index of top shares was 0.5 percent higher at 1,055.91 points after falling for the previous six sessions.

"It's a modest bounce after a poor day yesterday," Peter Dixon, economist at Commerzbank, said. "But, we are in a range trading environment and investors are still looking at what happens in the economy and how earnings will be."

Travel stocks featured among the best performers. Europe's largest travel firm TUI Travel gained 4.2 percent after the company said booking numbers are growing and that it expects to reduce its debt position over the coming months.

Retailers were in demand. Tesco, the world's third-biggest retailer, rose 1.3 percent after it beat forecasts with a 14 percent gain in first-half underlying profits.

K+S GAINS

German potash miner K+S rose 0.5 percent after rival Mosaic reported quarterly profit nearly tripled as demand for its fertilizers surged.

On the downside, British satellites company Inmarsat fell 3.5 percent after U.S. hedge fund Harbinger Capital Partners said it sold a 14.1 percent stake in the company at 630 pence a share.

Kazakhmys slipped 1.1 percent after it said its chairman Vladimir Kim has sold nearly a third of his stake in the company to diversify his investments ahead of a possible secondary listing of the Kazakh copper producer next year in Hong Kong.

The Euro STOXX 50, the euro zone's blue-chip index, however, faced some resistance. The index was 0.7 percent higher at 2,718.79 points, still below the 50 percent Fibonacci retracement of the index's fall from an April high to a May low at 2,737.62 points.

"Investors are still nervous ahead of the earnings season and Friday's U.S. non-farm payrolls," said Henk Potts, strategist at Barclays Wealth.

Later in the week, investors' will focus on U.S. nonfarm payrolls on Friday, and interest rate decisions from the Bank of England and the European Central Bank on Thursday.

Across Europe, the FTSE 100 index was 0.6 percent higher, Germany's DAX was up 0.3 percent and France's CAC 40 gained 0.8 percent. (Reporting by Joanne Frearson; Editing by Louise Heavens)

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