* FTSEurofirst 300 up 0.5 pct, highest close in 11 months
* Financials advance, Bank of Ireland surges 19 pct
* Energy shares gain, crude oil prices support
By Atul Prakash
LONDON, Sept 17 (Reuters) - European shares hit an 11-month
closing high for a second straight session on Thursday, powered
by energy and financial stocks, on expectations the global
economy was on a recovery path.
A raft of macro-economic data also boosted investors' belief
that the worst of the economic downturn was over, but analysts
said the market has risen too far too fast and could pause for a
short period before starting its forward march again.
The FTSEurofirst 300 <> index of top European shares
ended 0.5 percent higher at 1,011.26 points, rising for the
ninth session in 10. The index, up 21 percent in 2009, has
jumped 57 percent since hitting a record low in March this year.
It is up 19 percent this quarter and on track to post the
index's strongest quarterly performance in almost a decade, but
is still down about 38 percent from a near seven-year high
touched in mid-2007.
"We are moving into a period of stronger economic growth and
there are tangible signs we are coming out of the recession. You
have got companies going into this period of growth in a leaner
and meaner shape. That's a pretty powerful mix of positivity,"
said Henk Potts, equity strategist at Barclays Stockbrokers.
"The current rally is unsustainable but there is every
indication that we can at least hold on to these gains in the
short term -- be a little bit more cautious," he added.
Financials were among the top gainers, with the DJ banking
index <.SX7P> up 1.2 percent and surging 174 percent since early
March. Standard Chartered <STAN.L>, HSBC <HSBA.L>, Royal Bank of
Scotland <RBS.L>, BNP Paribas <BNPP.PA>, Societe Generale
<SOGN.PA> and Credit Agricole <CAGR.PA> rose 0.5-3.8 percent.
Bank of Ireland <BKIR.I> surged 18.6 percent after the bank
said it was confident it could raise internally any additional
capital that might be needed following the transfer of 16
billion euros of loans to a state-run "bad bank". []
Swedbank <SWEDa.ST> fell 2.2 percent. It moved to boost its
core capital, announcing plans to buy back up to 3 billion
Swedish crowns ($438.8 million) of Tier 2 debt. []
EARNINGS RECOVERY
Citigroup said in a note that it preferred sectors like
financials and energy as they "should continue to benefit from
an earnings recovery and are reasonably valued".
Energy shares gained as crude <CLc1> hovered around $72.50 a
barrel after rising more than 5 percent this week. BP <BP.L>,
Royal Dutch Shell <RDSa.L>, Repsol <REP.MC>, Total <TOTF.PA> and
StatoilHydro <STL.OL> added 0.7-1.6 percent.
Tullow Oil <TLW.L> jumped 4.9 percent, extending Wednesday's
9.2 percent rise, after the oil explorer said it had struck what
may turn out to be the largest oil find yet in a block it plans
to partly sell off in Uganda's Lake Albert basin.
Macroeconomic figures boosted market sentiment and prompted
investors to buy riskier assets such as equities.
The VDAX-NEW volatility index <.V1XI> was down 0.3 percent.
The lower the volatility index, which is based on sell and buy
options on Frankfurt's top-30 stocks <0#.GDAXI>, the higher is
investors' appetite for risky assets.
Data showed groundbreaking for U.S. homes and permits for
future building scaled a nine-month high in August, and the
number of people filing new claims for jobless benefits fell
last week, boosting chances of a robust economic recovery.
[]
Factory activity in the country's Mid-Atlantic region rose
in September to the highest level since June 2007, the
Philadelphia Federal Reserve Bank said. []
Across Europe, Britain's FTSE 100 index <>, Germany's
DAX <> and France's CAC 40 <> rose 0.5-0.8 percent.
"We've seen panic selling last winter, now we're seeing
panic buying. Investors who have been 'underweight' on equities
now worry about missing the big rally," said Jean-Marie
Mercadal, CIO of OFI Asset Management in Paris.
"But the easy part of the rebound is done. Stocks still have
room to grow, probably 20 percent over the next six months, but
it's not going to be automatic. People will have to do stock
picking."
(Additional reporting by Blaise Robinson in Paris; Editing by
David Cowell)
