By Sitaraman Shankar
LONDON, Feb 14 (Reuters) - European shares rose 0.7 percent
in early trade on Thursday, tracking economic data-driven gains
in the United States and Asia, as investors digested broadly
stronger results from Europe's top companies.
At 0917 GMT, the FTSEurofirst 300 <> index of European
bluechips was up 0.7 percent at 1,343.79 points, with commodity
stocks among the top weighted gainers.
Oil shares also rose, tracking higher crude prices.
Platinum specialist Lonmin <LMI.L> jumped 3.2 percent as
prices of the metal hit a new record, and Anglo American <AAL.L>
gained 2.2 percent on a newspaper report suggesting that Rio
Tinto <RIO.L> could bid for the group. Rio declined comment.
French computer consultancy Cap Gemini <CAPP.PA> and
Sweden's Swedbank <SWEDa.ST> jumped more than 7 percent, and
French cement maker Lafarge <LAFP.PA> and food group Danone
<DANO.PA> both gained around 4 percent, all on strong results.
"The results from Europe have been good, but like 2003, we
are in an inflection year, and in an inflection year, one needs
to look forward and trailing earnings are meaningless," said Ad
van Tiggelen, senior strategist at ING Investment Management in
Amsterdam.
"We are in a bear market and this is a bear market rally."
Swiss bank UBS <UBSN.VX> fell 6 percent after it said it
expected 2008 to be a tough year and unveiled $26.6 billion in
new exposure to risky U.S. mortgages.
German automaker Daimler <DAIGn.DE> gave up gains to trade
lower after an initial sharp rise on a higher proposed dividend
and bullish outlook.
U.S. stocks rose overnight on a surprise gain in January
retail sales, while Japanese shares were up 4.3 percent after
data showed the economy grew twice as fast as expected in the
final quarter of 2007.
U.S. Federal Reserve Chairman Ben Bernanke and Treasury
Secretary Henry Paulson were due to testify on the state of the
U.S. economy and financial markets before the Senate Banking
Committee at 1500 GMT.
Paulson is expected to tell Congress that the United States
is experiencing a "significant" housing market downturn but the
economy is fundamentally sound and should avoid recession.
MINI-RALLY
European shares have rallied 10 percent since hitting a low
for the year on Jan. 22, helped by two U.S. rate cuts that
lopped 125 basis points off the Fed funds rate.
At its lowest point this year, the FTSEurofirst 300 was 25
percent off a multi-year peak hit in July 2007. Analysts
consider a fall of 20 percent from such a peak as signalling a
bear market.
Banks were worst hit by a credit crisis stemming from a
meltdown in the U.S. subprime mortgage sector last year, and
have been among the top losers again this year.
The DJ Stoxx European banking index <.SX7P> has lost 15.5
percent so far in 2008, matching losses in autos and insurers.
Van Tiggelen said that he expected financials to lead the
markets higher as the months passed.
"The first thing to be buying is the financials," he said.
"On cyclicals, the bad news is yet to start," he added,
saying that he expected European company earnings to decline
5-10 percent this year.
(Editing by David Cowell)
