* FTSEurofirst 300 index up 2.7 percent
* Banks gain; Barclays trading strongly
* Banco Popolare recovers from early falls
By Joanne Frearson
LONDON, March 16 (Reuters) - European shares closed higher
for a fifth consecutive day on Monday led by a banking sector
bouyed by news that Barclays <BARC.L> had discussed divesting a
unit and it was trading strongly.
The pan-European FTSEurofirst 300 <> index of top
shares was up 2.7 percent higher to close at 720.88 points. It
is still down 13.6 percent in 2009.
"The market is going up as fundamentally people are starting
to think about an economic recovery and a recovery in profits,
and profits expanding as opposed to profits contracting," said
Darren Winder, strategist at Cazenove.
"But, there is nervousness about whether this can last. This
is a strong rally, but the corporate and macro newsflow is still
quite poor so understandbly people are questioning whether we
see some retrenchment of these gains. We are probably going to
run into some profit-taking in the near term."
Banks added the most points to the index. Barclays soared 23
percent after it said it had discussed selling its iShares unit
and had enjoyed a strong trading performance so far this year.
[]
HSBC <HSBA.L>, BNP Paribas <BNPP.PA>, Societe Generale
<SOGN.PA>, Banco Santander <SAN.MC> were up 4.1-9.3 percent. The
DJ Stoxx bank index <.SX7P> is still down 23 percent this year.
Banks were also supported by comments from U.S. Federal
Reserve Chairman Ben Bernanke on Sunday when he said he saw the
U.S. economic decline moderating and recovery beginning in 2010,
but risks remained.
Drugmakers were also higher. Novartis <NOVN.VX>,
GlaxoSmithKline <GSK.L> and SanofiAventis <SASY.PA> were up
2.6-6 percent.
EZ INFLATION DATA SUPPORTS EQUITIES
Also supporting equities was data that euro zone inflation
rose last month, but with economists predicting price growth
would fall again in March and forecasting another ECB rate cut
in April.
Eurostat said prices in the 16 countries using the euro rose
an expected 0.4 percent month-on-month in February for a 1.2
percent year-on-year gain, up from 1.1 percent in January --
confirming its earlier annual estimate.
Inflation is normally negative for stocks, but in the
current environment investors fear deflation more and inflation
could be a sign growth is returning.
"During the course of next year, inflation is likely to
settle at levels comfortably below 2 percent as rising economic
slack makes its presence felt," Fortis economist Nick Kounis
said, adding: "The favourable medium-term outlook suggests that
the ECB has more room to ease monetary policy further".
Italy's Banco Popolare <BAPO.MI> was up 1 percent, having
recovered from an earlier fall of 12 percent after saying it
would launch a buyout offer for affiliate Banca Italease
<BIL.MI> and delist it as part of a reorganisation.
Linde <LING.DE> lost 0.3 percent after the world's
second-largest industrial gases supplier, scrapped its 2010
profit goals and said it would speed up cost cuts to counter the
impact of the economic slump. []
Across Europe, the FTSE 100 <> index was up 2.9
percent, Germany's DAX <> was up 2.3 percent and France's
CAC 40 <> was up 3.2 percent.
(Reporting by Joanne Frearson; Editing by Dan Lalor)
(joanne.frearson@thomsonreuters.com; +44 207 542 2773, Reuters
Messaging:joanne.frearson.thomsonreuters.com@reuters.net)
