European shares close higher; financials strong

                                
 * FTSEurofirst 300 index closes 0.6 percent higher
                                
 * Banks gain as data shows pick-up in manufacturing activity
                                
 * Miners rise on stronger metals prices 
                                
 
                                
 By Harpreet Bhal
                                
 LONDON, Feb 1 (Reuters) - European shares closed higher on
Monday as strong manufacturing data from the United States
reinforced the view the economy is on the mend, boosting banking
stocks, while miners rose on firmer metals prices. 
                                
 The pan-European FTSEurofirst 300 <.FTEU3> index closed 0.6
percent higher at 1,018.00 points. In January, the index
suffered its worst monthly loss since February 2009 but it
remains up 57 percent from its lifetime low of March last year.
                                
 Banks were among the biggest gainers on the index, with
Royal Bank of Scotland <RBS.L>, Barclays <BARC.L>, Credit
Agricole <CAGR.PA>, Commerzbank <CBKG.DE>, Deutsche Bank
<DBKGn.DE> and HSBC <HSBA.L> up 1.4 to 7.9 percent. 
                                
 Shares were lifted by data showing the manufacturing sector
in the United States grew in January at a faster rate than
expected. The report followed strong data from China, Australia
and the euro zone. [ID:nN01363414] 
                                
 "The reason the market has reacted positively to the numbers
today is because we have very different expectation levels now
compared to a couple of weeks ago when the market was higher,"
said Lars Kreckel, equity strategist at Exane BNP Paribas. 
                                
 "With lower expectations and more bearish sentiments the
market reacted a bit more to good news and that is likely to
continue for some time to come," he said. 
                                
 Shares also received a boost as investors drew some comfort
on Greece's debt problems after a top European Union official
said the country's fiscal cutback plans were ambitious but
achievable and that the EU fully endorses them. [ID:nBFA001042]
                                
 Equity markets showed limited initial reaction to U.S.
President Barack Obama's budget for the fiscal year to 2011,
which forecast a record-high deficit of $1.56 trillion in 2010,
equal to 10.6 percent of gross domestic product.
[ID:nN31157907]
                                
 
                                
 MINERS STRONG
                                
 Miners were also among the gaining sectors, as metals prices
rebounded from earlier lows as fears over China's monetary
tightening waned. 
                                
 Anglo American <AAL.L>, BHP Billiton <BLT.L>, Eurasian
Natural Resources <ENRC.L>, Kazakhmys <KAZ.L> and Xstrata
<XTA.L> rose between 1.6 and 5.1 percent. 
                                
 China's vast manufacturing industry expanded at a near
record pace, but Beijing's moves last month to rein in rapid
growth and curb inflationary pressures have sparked fears that
such measures could impede a still-weak global recovery and curb
Chinese demand for energy and commodities. [ID:nSGE61000]
                                
 The euro zone manufacturing sector grew at its fastest pace
in two years in January but the divergence between laggard Spain
and the rest of the big four economies widened, while Britain's
manufacturing activity grow at its fastest rate in 15 years.
[ID:nLDE6100K]
                                
 "As the week moves on, the Bank of England rate decision and
(U.S.) payrolls are all set for release, and after today's
better numbers many will expect some positive readings to help
the markets sustain this positive start to the week," said James
Hughes, market analyst at CMC Markets.
                                
 Across Europe, Britain's FTSE 100 <.FTSE>, Germany's DAX
<.GDAXI> and France's CAC 40 <.FCHI> added 0.6 to 1.1 percent. 
                                
 Among individual stocks, Irish airline Ryanair <RYA.I> rose
6.7 percent as the company increased its profit forecast for the
year after a narrower-than-expected third-quarter net loss.
[ID:nDUB003166]
                                
 On the downside, Vivendi <VIV.PA> fell 2.4 percent after the
French media and telecommunications group was found guilty on
Friday of misleading investors by a U.S. jury. [ID:nN29195757]
 (Editing by David Holmes)