* FTSEurofirst 300 up 1.9 pct
* Strong results from U.S. firms boost sentiment
* Financial, automobile shares among top gainers
By Atul Prakash
LONDON, July 13 (Reuters) - European shares advanced for a
sixth straight session and closed at a three-week high on
Tuesday after impressive results from some major U.S. companies
raised hopes for a strong regional quarterly earnings season.
Sentiment was also boosted by a successful Greek treasury
bill auction, the country's first debt sale since a massive
emergency loan backstop from the European Union and
International Monetary Fund was agreed in May. []
As a result of the improving sentiment, the VDAX-NEW
volatility index <.V1XI> hit 11-month lows. The lower the index,
which is based on sell and buy options on Frankfurt's top-30
stocks <0#.GDAXI>, the higher the market's desire to take risk.
The FTSEurofirst 300 <> index of top European shares
ended 1.9 percent firmer at 1,045.47 points, the highest close
since June 22. It is up 8 percent since hitting a low in early
July on euro zone debt fears and concern over bank finances.
U.S. aluminium major Alcoa <AA.N>, the first Dow component
to report, posted better-than-expected second-quarter earnings
late on Monday, raising hopes of strong results for other firms.
U.S. rail company CSX Corp <CSX.N> said its profit rose 36
percent in the second quarter, beating analysts' expectations.
"Alcoa is seen as a bellwether and naturally something that
large will give an overview of the current conditions," said
Richard Greenwood, fund manager at Bedlam Asset Management.
"But I expect volatility to continue and see a fight between
the undeniable sovereign pressures and fiscal tightening and the
fact that corporates are generally cash rich and reporting
higher margins."
Investors awaited results from U.S. chip giant Intel
<INTC.O> after the Wall Street close, while bellwethers such as
Google <GOOG.O>, JPMorgan <JPM.N>, Bank of America <BAC.N> and
General Electric <GE.N> were set to announce results this week.
"Those upbeat earnings from Alcoa last night certainly seem
to have set the pace amongst equity traders who once again seem
convinced that this latest rally still has legs," Will Hedden,
senior sales trader at IG Index, said.
European banks topped the gainers list after the Greek
auction and as worries over the sector's stress tests moved to
the back burner. National Bank of Greece <NBGr.AT>, Barclays
<BARC.L>, Dexia <DEXI.BR> and Standard Chartered <STAN.L> rose
2.2-5.8 percent.
The European Union is set to announce on July 23 how its
banks would fare under further adverse conditions, including a
deeper fall in value of sovereign bonds, in a bid to boost
market confidence damaged by the Greek sovereign debt crisis.
Greece passed its first borrowing test since a giant EU/IMF
funding deal in May and easily sold 1.625 billion euros ($2.03
billion) of 6-month T-bills.
Elsewhere, sources told Reuters that preliminary results
showed all of the German banks tested in the European stress
test were on track to pass, including the regional Landesbanken.
[]
AUTOS RACE AHEAD
Automobile stocks also received investors' attention after
Germany's BMW <BMWG.DE> raised its 2010 pretax profit and sales
outlook, citing better-than-expected earnings at its automotive
business and buoyant luxury car markets. []
BMW and rival Daimler <DAIGn.DE> surged 8.3 percent and 5.4
percent, respectively, while Volkswagen <VOWG.DE>, Peugeot
<PEUP.PA> and Renault <RENA.PA> rose 2.8 to 5.3 percent.
The Euro STOXX 50 <>, the euro zone's blue-chip
index, rose 1.9 percent at 2,737.59 points, flirting with a key
resistance level of 2,737.62 -- the 50 percent retracement of
the index's fall from its April high to its May low.
"Downtrend signals have abated, disrupted by the start of
the earnings season. But there aren't uptrend signals either,
and volumes are ridiculously low, so it's better not to read too
much into this rebound." said IG Markets analyst Vincent Ganne.
Volume on the FTSEurofirst 300 represented 71 percent of the
index's 90-day average daily volume.
BP <BP.L> rose 2.9 percent on optimism the Gulf of Mexico
oil spill could soon be contained. It prepared to test a new cap
on its runaway well and said its plans to sell non-core assets
were moving forward. []
Across Europe, UK's FTSE 100 <>, Germany's DAX
<>, France's CAC 40 <>, Spain's IBEX 35 <>,and
Italy's FTSE MIB <.FTMIB> rose 1.6 to 2 percent. Portugal's PSI
20 <> was up just 0.1 percent as ratings firm Moody's cut
Portugal's rating to A1 with a stable outlook. []
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For a graphic on BP share price:
http://r.reuters.com/dez27m
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(Graphics by Scott Barber; additional reporting by Blaise
Robinson in Paris; editing by Simon Jessop)
