* FTSEurofirst 300 up 1 pct, touches 28-month high
* Miners among top gainers as metals prices advance
* Financials bounce back after declines in the previous day
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, Jan 18 (Reuters) - European shares hit a 28-month
high on Tuesday, with stronger metals on a weaker dollar and
supply worries boosting miners, while automakers advanced on
hopes that improving economic outlook will boost vehicle demand.
Banks bounced back after losses on Monday, with Bank of
Ireland <BKIR.I> up 7 percent and BBVA <BBVA.MC> rising 4
percent. The VDAX-NEW volatility index <.V1XI>, Europe's main
barometer of investor anxiety, fell 4.7 percent to a four-week
low, indicating that appetite for riskier assets had risen.
At 0959 GMT, the FTSEurofirst 300 <> index of top
European shares was up 1 percent at 1,168.85 points after rising
as high as 1,168.99. The index is up 4 percent this year after
rising more than 7 percent in 2010.
Miners featured among the top gainers as copper and
aluminium prices rose. The STOXX Europe 600 Basic Materials
index <.SXPP> gained 1.5 percent, while Rio Tinto <RIO.L> rose
1.4 percent after reporting it produced record quantities of
iron ore last year. []
Analysts said expectations of good company results and lower
valuations for European stocks were prompting people to buy
stocks, though investors stayed cautious.
"The markets are waiting for an opportunity to move ahead
rather than looking for an opportunity to take profits," said
Mike Lenhoff, chief strategist at Brewin Dolphin.
"The backdrop is still very supportive. This week is a very
big week for corporate earnings in the U.S. and on balance, the
results should be quite good."
BIG COMPANY RESULTS
JPMorgan Chase & Co <JPM.N> reported stronger-than-expected
fourth-quarter earnings on Friday, while the market is waiting
for updates from Citigroup <C.N>, IBM <IBM.N> and Apple <AAPL.O>
later in the day.
Apple said Chief Executive Steve Jobs was taking medical
leave for the third time since 2004, reviving fears over the
long-term future of the iPhone and iPad-maker. []
According to Thomson Reuters Datastream, Europe's stock
valuation levels remain relatively low. The STOXX Europe 600
<> carries a forward P/E ratio of 10.9, well below a
10-year average of 13.7.
Auto shares also gained, with BMW <BMWG.DE> up 2 percent and
Daimler AG <DAIGn.DE> rising 3.8 percent.
"In all, investor sentiment continues to be fragile and
changeable, with volatility expected to remain in the near
term," said Keith Bowman, equity analyst at Hargreaves Lansdown.
"Hopes for progress in Europe and further progressive U.S.
earnings reports appear to be driving early trade. A second day
of a meeting between EU finance ministers is being closely
monitored," he added.
The euro zone ministers showed no indications that they were
closing in on any firm decisions. The chairman of euro zone
finance ministers, Jean-Claude Juncker, said they discussed many
options, but favoured none. []
Lenhoff saw some silver linings.
"You have got a more positive approach to try to tackle the
sovereign debt crisis in Europe. We have to see how far it gets,
but at least they are talking and are prepared to put the issues
on the table," he said.
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC 40 <> rose 0.9 to 1.1 percent,
while Spain's IBEX <> was up 2.2 percent.
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Euro zone-contagion: http://link.reuters.com/nap85r
Euro zone-bonds: http://link.reuters.com/gap85r
Stories on euro zone crisis []
Comments by EU officials, finance ministers []
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(Editing by Mike Nesbit)
