* Banks, commodities top points contributors to Europe index
* Elan top percentage gainer, rises on Alzheimer drug trial
* All eyes on Goldman results, U.S. inflation data
By Sitaraman Shankar
LONDON, June 17 (Reuters) - European shares rose in early
trade on Tuesday, lifted by gains in banks and commodity stocks
as investors geared up for results from Goldman Sachs <GS.N>.
At 0831 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.7 percent at 1,270.35 points, little
affected by UK inflation figures that came in higher than
expected.
Miners gained on higher metal prices and a newspaper report
that China's state-owned Chinalco aluminium giant was keen to
buy a range of global resource assets and may consider raising
its stake in global miner Rio Tinto <RIO.L>.
Rio rose 2 percent and BHP Billiton <BLT.L> gained 2.5
percent.
Irish drugmaker Elan Corp <ELN.I> rose 6.4 percent to top
European gainers after it said that an intermediate trial of a
drug for Alzheimer's disease supported an earlier decision to
start final Phase III trials.
Whitbread <WTB.L> rose 3.8 percent after Britain's biggest
hotel and restaurants operator said that like-for-like sales
across its businesses rose.
Banks were broadly higher, led by HBOS <HBOS.L>, which
jumped 5 percent, while Commerzbank <CBKG.DE>, Royal Bank of
Scotland <RBS.L> and Deutsche Bank <DBKGn.DE> all rose between
1.7 and 2.6 percent.
Oil stocks were also higher, as oil hovered around the $134
a barrel mark. BP <BP.L> gained 1.2 percent and Royal Dutch
Shell rose 1.3 percent.
But analysts said that they expected equities to fall away
as the year progressed.
"We're going to be seeing a dampener, with a nine-month lag
(to the United States)," said Justin Urquhart Stewart,
investment director at Seven Investment Management.
"There will be little upward pressure on equities in the dog
days of summer, and I would expect us to end the year lower than
where we are now," he said.
The FTSEurofirst 300 has fallen 16 percent so far this year,
taken lower by big writedowns at top banks stemming from a
meltdown in the market for risky U.S. mortgages.
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC <> rose 0.8 to 0.9 percent. So
far this year, the FTSE has fallen 9.5 percent, faring better
than the DAX and the CAC due to its heavy commodity weighting at
time when oil and metals are surging.
But prices continue to be a worry, with data on Tuesday
showing that British consumer price inflation rose more than
expected to a series high of 3.3 percent in May, reinforcing
market expectations of higher UK rates.
REPORTS ON FED PROVIDE BOOST
Stocks were, however, supported by media reports that the
U.S. Federal Reserve was unlikely to raise interest rates in the
next few months unless the inflation outlook worsens, while
speculation that it could hike rates several times this year is
probably overdone.
All 15 primary dealers in a Reuters poll earlier this month
said they expected the Fed to leave rates on hold at its June
meeting.
"The fact that there were three articles in the space of 24
hours shows that it really wants to rein in rate hike
expectations... That's one factor that's buoying stocks as it
eases one pressure that's crimping vulnerable economies," said
Nicola Chadwick, international economist at Commonwealth Bank of
Australia.
Later in the session, investor focus will shift to results
from Goldman Sachs, U.S. inflation data and Germany's ZEW
sentiment indicator.
"I'd expect Goldman to show a clean pair of heels to the
market -- they've deftly side-stepped the credit crisis and
benefited from the commodities surge," said Stewart.
A source familiar with the matter said that Goldman was
about to bail out a $7 billion structured investment vehicle run
by Cheyne Capital, boosting hopes that markets for trouble
mortgage assets are easing.
(editing by Elizabeth Fullerton)
