By Blaise Robinson
PARIS, Jan 29 (Reuters) - European stocks ended higher on
Tuesday, helped by expectations of a U.S. interest rate cut
while strong durable goods orders data soothed worries over the
health of the world's biggest economy.
Shares in French bank Societe Generale <SOGN.PA>, which last
week unveiled a massive loss it blamed on a rogue trader, soared
10.4 percent, sparked by market talk that rival bank BNP Paribas
<BNPP.PA> could launch a takeover bid for it.
Mining stocks were among the biggest gainers, buoyed by
rising base metal prices. Anglo American <AAL.L> gained 5.8
percent, Rio Tinto <RIO.L> added 2.7 percent and BHP Billiton
<BLT.L> rose 4 percent.
The FTSEurofirst 300 <> index of top European shares
closed 1.6 percent higher at 1,338.28 points.
But despite Tuesday's rise, the index is down 11.2 percent
in January, on track to record its worst monthly performance
since Sept. 2002, as equity markets around the world got
hammered by fears over the prospect of a U.S. economic downturn.
"The rise in durable goods orders is stronger than what we
had expected," Global Equities analysts wrote in a note.
"The growth in orders is slower than what we saw between
2004 and 2006, but it doesn't point to a U.S. recession."
Data showed on Tuesday that new orders for long-lasting
U.S.-made manufactured goods rose by a much larger-than-expected
5.2 percent in December. Analysts polled by Reuters had expected
orders for durables to rise 1.5 percent.
Around Europe, Germany's DAX index <> gained 1.1
percent, UK's FTSE 100 index <> rose 1.7 percent and
France's CAC 40 <> added 1.9 percent.
Banks, pummelled over the past six months on concerns over
their exposure to the troubled U.S. subprime mortgage market,
rose on Tuesday, with the DJ Stoxx bank index <.SX7P> rising 2.2
percent. UBS <UBSN.VX> added 2.9 percent and Royal Bank of
Scotland <RBS.L> gained 4.7 percent.
Commerzbank <CBKG.DE> soared 5.9 percent, with several
traders citing market talk of a takeover bid for the German
bank.
German property financier Hypo Real Estate <HRXG.DE> surged
8.4 percent after it announced that the voting stake held by the
country's biggest fund investor DWS, part of Deutsche Bank
<DBKGn.DE>, rose above 3 percent.
French media group Lagardere <LAGA.PA> gained 5.5 percent
as traders cited an upgrade on the stock from Merrill Lynch to
"buy".
Retailer Hennes & Mauritz (H&M) <HMb.ST> dropped 2 percent
after Morgan Stanley cut its rating to "underweight" from
"overweight" due to a gloomy outlook for the retail sector.
German steel trader Kloeckner & Co <KCOGn.DE> added 3.9
percent as preliminary 2007 earnings pleased investors.
Banca Italease <BIL.MI> rose 2 percent after a report in an
Italian business daily said a German bank could be interested in
buying a big stake in the leasing company.
RATE CUT EYED
The U.S. Federal Reserve's policy-setting Open Market
Committee was set to meet on Tuesday and Wednesday, and
investors expected the session to result in a rate cut to boost
the economy.
A total of 18 out of 20 primary dealers polled by Reuters
forecast the Fed would cut benchmark rates, with 14 expecting a
half-point reduction.
The Fed slashed rates by 75 basis points last week in an
emergency move aimed at shielding the economy from a recession
and calming financial markets turbulence.
(editing by Elizabeth Fullerton)
