European shares rise as bank optimism fuels rally
By Blaise Robinson
PARIS, April 2 (Reuters) - European stocks rose in early
trade on Wednesday, adding to the previous session’s hefty gains
as optimism that the worst might be over in the global credit
crisis fuelled an extended rally in banking shares.
But the gains were limited by retreating auto stocks, on the
downside after data showed a 12 percent drop in overall U.S.
auto sales in March, hit by shaky consumer confidence, high fuel
prices and concern that a housing market downturn could spread
into a full recession.
Daimler (DAIGn.DE: Quote, Profile, Research) was down 2.6 percent, Porsche (PSHG_p.DE: Quote, Profile, Research)
down 2.5 percent and Volkswagen (VOWG.DE: Quote, Profile, Research) down 0.4 percent.
GlaxoSmithKline (GSK.L: Quote, Profile, Research) gained 1 percent, lifted by positive
news about the company’s controversial diabetes drug Avandia,
while AstraZeneca (AZN.L: Quote, Profile, Research) rose 1.6 percent on a brokerage
upgrade after an upbeat study on its Crestor drug.
At 0816 GMT, the FTSEurofirst 300 index of top
European shares was up 0.3 percent at 1,306.78 points, after
rising to a one-month high of 1,310.86 points. The index jumped
3.2 percent on Tuesday.
“This could go on for a while, because the market was very
oversold and the sentiment had become quite negative,” said
Philippe Gijsels, senior equity strategist at Fortis Bank in
Brussels. “But at this time, there is nothing to suggest that
this is more than a bear market rally.”
Barclays (BARC.L: Quote, Profile, Research) was up 2.9 percent, Banco Santander
(SAN.MC: Quote, Profile, Research) added 1 percent and Deutsche Bank (DBKGn.DE: Quote, Profile, Research) was up 1.8
percent.
A $19 billion writedown by Swiss bank UBS (UBSN.VX: Quote, Profile, Research) on
Tuesday raised hopes that banks were aggressively cleaning up
their books to get rid of investments linked to the turmoil in
the U.S. subprime mortgage market.
The market also got a boost from growing hopes that the G7
powers might act together to help shore up financial markets and
soothe the credit crisis. Continued…
