* FTSEurofirst 300 ends 0.6 pct higher; 3rd day of gains
* Financials, retailers among top gainers
* Pharmaceuticals, miners slip
By Atul Prakash
LONDON, May 27 (Reuters) - European equities finished higher
for a third straight session on Wednesday, boosted by financial
and retail shares, on hopes the market has seen its worst for
the year and is on track for a recovery.
The FTSEurofirst 300 <> of top European shares ended
0.6 percent higher at 870.63 points. The index, which slumped 45
percent in 2008, has gained in eight of past 10 sessions and is
up 35 percent from a lifetime low hit in early March.
Banks added most points to the index, with HSBC <HSBA.L>
rising 2 percent, Societe Generale <SOGN.PA> up 1.8 percent,
Credit Agricole <CAGR.PA> advancing 3 percent and UBS <UBSN.VX>
gaining 1.7 percent.
"There is an increase in optimism in terms of some of the
economic indicators that we have been seeing and the market is
no longer pricing in the prospect of a further depression
scenario," said Henk Potts, equity strategist at Barclays
Stockbrokers.
"Confidence has risen quite significantly, not only at the
consumer level but also at the business level, helped by a
stabilisation of the financial sector," he added.
Data showed the pace of sales of existing U.S. homes rose
2.9 percent in April, supporting views the three-year housing
recession was near a bottom. [] In Japan, April
exports rose for a second month and consumer confidence in
France and Sweden improved.
Retailers also gained ground. Morrison <MRW.L>, Tesco
<TSCO.L> and Carrefour <CARR.PA> advanced 1.5-3.9 percent.
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC <> rose 0.1-0.8 percent.
In recent sessions, the FTSEurofirst 300 tested and held
technical support on the bottom of its uptrend channel extending
back to early March, now at 850 points. The top of the channel
is currently at 922 points, but the index faces a technical
resistance at around 875 -- its 200-day moving average.
"It's a sensible conclusion that we have avoided a
depression, and while we're admittedly in a deep recession, the
terrain we are walking on has stabilised and the macroeconomic
data are producing rays of hope for the second half," said Franz
Wenzel, strategist at AXA Investment Managers.
ECONOMY STABILISING?
But some analysts remained cautious and said they needed to
see more evidence before predicting that the market had seen the
worst of the financial crisis.
"When a giant like GM is wobbling, it's difficult for
everyone to keep their footing. And so it seems the question
remains: have we been seeing signs that the global economy is
stabilising or has it just been a morale-boosting month for
equities?," said Anthony Grech, a market strategist at IG Index.
General Motors <GM.N> said a crucial bond exchange proposal
failed to gain enough support and that its board of directors
would meet to review the automaker's options, clearing the path
for what would be the largest U.S. industrial bankruptcy ever.
[]
And data showed new commercial vehicle registrations in
Europe fell 42 percent in April compared with the same month
last, industry association ACEA said.
Pharmaceutical stocks, traditionally seen as defensives,
were among top losers, with AstraZeneca <AZN.L> falling 2.1
percent, Sanofi-Aventis <SASY.PA> down 1.4 percent and Shire
<SHP.L> falling 1.8 percent.
Miners were also down. BHP Billiton <BLT.L>, Antofagasta
<ANTO.L>, Rio Tinto <RIO.L>, Xstrata <STA.L> and Eurasian
Natural Resources <ENRC.L> fell 0.1-0.6 percent.
"The market is very sensitive to every bit of macro data,"
said Christian Jimenez, president of Imene Investment partners.
"But overall, the rally remains fragile, and we could see a
selloff when people realise how damaging for the U.S. economy
... GM's bankruptcy (would be), and when financial institutions
start to unveil losses from credit card operations, which could
become the next big writedown wave."
(Additional reporting by Blaise Robinson in Paris; editing by
John Stonestreet)
