* Miners, carmakers lift European stock markets
* Goldman earnings, SIV rescue support banks
* Central banks tone down rate hike expectations
By Peter Starck
FRANKFURT, June 17 (Reuters) - European stocks rose on
Tuesday, led by Daimler <DAIGn.DE> after news that the German
carmaker will resume share buybacks and on strength in miners
such as Rio Tinto <RIO.L> amid takeover speculation.
Better than expected quarterly profits from Goldman Sachs
<GS.N> and news that the U.S. investment bank has completed a
long-awaited rescue of a $7 billion structured investment
vehicle supported European banks, notably Barclays <BARC.L>.
Stock markets also drew strength from remarks signalling
that the U.S. Federal Reserve, the European Central Bank and the
Bank of England were toning down expectations of aggressive
monetary policy tightening to combat rising inflation.
The FTSEurofirst 300 <> index of top European shares
closed 0.5 percent higher at 1,268.90 points, wiping out the
previous session's losses. The index is down 18.7 percent so far
in 2008 but 5.8 percent above is mid-March year-low.
Investment strategists were divided on the outlook.
"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," Seven Investment Management's Justin Urquhart
Stewart said.
But Klaus Martini, global chief investment officer at
Deutsche Bank's <DBKGn.DE> private asset management unit, saw
scope for gains.
"There is potential in the stock markets once the financial
crisis calms down and once we have more transparency on
corporate earnings," he said, adding the DJ EuroSTOXX 50 index
<> could rise some 12.5 percent on a 12-month horizon.
"It's hard to say exactly when the financial sector crisis
will be over but already now you can do some wonderful
bottom-fishing," Martini said.
"We are in for quite a rebound in bank shares overall," he
said, though he did not say which specific stocks he favoured.
Barclays rose 3.5 percent, HBOS <HBOS.L> was up 3.4 percent,
Societe Generale <SOGN.PA> gained 3.2 percent and BNP Paribas
<BNPP.PA> and Royal Bank of Scotland (RBS) <RBS.L> added 2.7
percent each.
Dresdner Kleinwort upgraded RBS to "add" and Barclays to
"hold", citing those stocks' "substantial underperformance".
Both banks, however, "still face earnings headwinds," Dresdner
said in a research note on UK banks.
"We focus on provisions, and find that some banks already
discount very negative scenarios ... We do not expect a return
to the early 1990s in terms of bad debts, as the economic
environment is fundamentally different," Dresdner said.
The DJ Stoxx European bank index <.SX7P> rose 0.9 percent.
SHARE BUYBACK
Autos <.SXAP> were the top sectoral performer with a gain of
2.5 percent. Daimler climbed 3.2 percent to 45.08 euros after
unveiling plans to spend up to 6 billion euros ($9.31 billion)
to repurchase 10 percent of its stock.
DZ Bank said the buyback "will help the sentiment especially
after the weak share price performance in the past weeks," and
saw scope for the stock reaching 48-50 euros in the short term.
A rise in the price of some base metals such as aluminium
<MAL3=LX> and steady precious metals helped miners, which were
also boosted by a newspaper report that China's state-owned
aluminium producer Chinalco was keen to buy a range of global
resource assets and may consider raising its stake in Rio Tinto.
Rio Tinto rose 3.5 percent and BHP Billiton <BLT.L>, which
has bid more than $180 billion for Rio Tinto, firmed 3.8
percent.
Shares in Dutch chip equipment maker ASM International
<ASMI.AC> rose 9 percent after news that U.S. Applied Materials
<AMAT.O> and private equity firm Francisco Partners have made an
unsolicited bid worth up to $800 million for ASM's main
business.
Swedish telecommunications equipment maker Ericsson
<ERICb.ST> rallied 3 percent. Its mobile phone joint venture
with Japan's Sony <6758.T>, Sony Ericsson, forecast strong
demand for the global handset industry in the second quarter and
the second half of this year.
Irish drugmaker Elan Corp <ELN.I> rose 5.7 percent after it
said an intermediate trial of a drug for Alzheimer's disease
supported an earlier decision to start final Phase III trials.
Shares in Britain's biggest hotel and restaurant operator,
Whitbread <WTB.L>, rose 4.3 percent to 1,270 pence after saying
like-for-like sales across its businesses rose 7 percent in the
13 weeks to May 29.
"The company derives a defensive element from the potential
for down-trading within the hotel sector towards its budget
Premier Inn brand," Killik & Co said in a note, launching a
"tactical buy" recommendation on the stock with a price target
of 1,500 pence.
Among the day's leading losers, Coca-Cola Hellenic <HLB.AT>
fell 8.7 percent after UBS and Morgan Stanley slashed their
price targets for the stock in the wake of the soft drink
bottling company's lowered 2008 profit guidance.
(Additional reporting by Sitaraman Shankar and Amanda Cooper in
London)
