* FTSEurofirst 300 rebounds from 9-month low, up 2 percent
* Financials, miners, oils among top sectoral gainers
* P/E ratios fall to 10-month low, markets may stabilise
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, May 26 (Reuters) - European equities bounced back on
Wednesday from nine-month lows a day earlier, with investors
returning to the market to buy beaten-down stocks, while a
recovery in commodity prices supported resource-related shares.
At 0800 GMT, the FTSEurofirst 300 <> index of top
European shares was up 2 percent at 968.80 points after falling
2.4 percent in the previous session.
Financials topped the gainers list, with the STOXX Europe
600 banking index <.SX7P> rising 2.4 percent after falling 3.7
percent on Tuesday.
Standard Chartered <STAN.L>, HSBC <HSBA.L>, Barclays
<BARC.L>, Lloyds Banking Group <LLOY.L>, BNP Paribas <BNPP.PA>
and Societe Generale <SOGN.PA> jumped 1.2 to 4.9 percent.
But investors stayed cautious in buying European stocks,
which were down more than 15 percent at Tuesday's close from a
high reached about six weeks ago, as concerns persisted that the
euro zone debt crisis could slow the flow of credit and hit the
financial sector.
"There is always bargain-hunting once we have seen markets
fall. But it would be too early to expect confidence to creep
back into the market," said Klaus Wiener, head of research at
Generali Investments.
"Markets are currently focused very much on Europe but there
are a lot of areas in the world -- the UK, the U.S., Japan --
where we are also in a non-sustainable fiscal situation."
Late on Tuesday, Italy joined Europe's push for fiscal
austerity with 24 billion euros of deficit-reducing cuts that
target public workers and local government. []
U.S. Treasury Secretary Timothy Geithner arrived in Europe
to press for united action to tackle a deepening debt crisis,
which has prompted the market to heavily sell the euro. The
currency fell further on Wednesday.
FRAGILE MARKET
Analysts said investors were not confident that measures so
far, including Germany's unilateral ban on some financial
trades, austerity plans by indebted euro zone members or even a
750 billion euro ($926 billion) rescue fund will be enough to
prevent Europe's woes from derailing the global recovery.
"After yesterday's dramatic falls, a semblance of calm has
returned," said Owen Ireland, analyst at ODL Securities.
"One can't hide the fact though that there is an underlying
fragility to market... the rallies are smaller than the falls,
there may be a reluctance to pile monies into the markets."
Wiener of Generali Investments said that from a valuation
perspective, the market had reached to a low level and there was
a chance it could stabilise around these low levels.
The recent sharp pullback on European stocks has dragged
European stock valuations to their lowest level in 10 months.
The average price-to-earnings (P/E) ratio of stocks in the STOXX
Europe 600 <> is around 12. This compares with a current
P/E ratio of 15.5 for Wall Street's S&P 500 index <.SPX>.
Energy shares gained as crude <CLc1> advanced 1.4 percent
after a report showing a drop in U.S. gasoline stockpiles. BG
Group <BG.L>, Repsol <REP.MC> and Total <TOTF.PA> added 2 to 2.6
percent.
Miners got strength from higher metals prices. BHP Billiton
<BLT.L>, Anglo American <AAL.L>, Rio Tinto <RIO.L> and Xstrata
<XTA.L> rose 3.7 to 4.6 percent.
(Editing by Hans Peters)
