* FTSEurofirst 300 index rises 1.2 percent
* Volkswagen rises as earnings beat expectations
* Lloyds drops on margin outlook
By Joanne Frearson
LONDON, Feb 25 (Reuters) - European shares bounced after a
week-long sell-off on Friday, as steady oil prices eased
concerns over inflation, and strong company results gave the markets a boost.
Building materials firm Saint-Gobain <SGOB.PA> climbed 5.5 percent after it gave a strong earnings outlook, and carmaker Volkswagen <VOWG_p.DE> added 6.2 percent in response to forecast-be
1635019118
The pan-European FTSEurofirst 300 <> index of top
shares closed up 1.2 percent at 1,159.60 points, but still
recorded the biggest weekly fall since July 2010 after civil
unrest in Libya caused a spike in oil prices and a stock market
sell-off.
Buoying equity investor sentiment heading into the weekend
was news that top oil exporter Saudi Arabia had increased output to make up for any shortages caused by the Libyan unrest.
[]
That helped steady oil prices off 2-1/2 year highs and tempered some of the inflation concerns across Europe.
"I don't believe the falls of recent weeks are a fundamental
change in markets," said Geert Ruysschaert, strategist at BNP
Paribas Fortis Private Banking. "It's more a temporary
correction, and then the market will go up again."
Several technical elements supported the rebound on the euro
zone's blue-chip Euro STOXX 50 <> including the
Relative Strength Indicator (RSI), said Philippe Delabarre, technical analyst at Trading Central.
The Euro STOXX 50 index gained 1.2 percent, while the RSI
was at 50.1, well below the 70 and above level that is considered overbought territory.
The VDAX-NEW volatility index <.V1XI>, Europe's main
barometer of investor anxiety, was down 5.7 percent on Friday,
taking a breather after a 35 percent jump earlier in the week.
The higher the volatility index, based on sell and buy options on Frankfurt's top-30 stocks <0#.GDAXI>, the lower investors' appetite for risky assets such as equities.
MAN GAINS
German truck maker MAN <MANG.DE> rose 4.3 percent on resurfaced talk of a potential offer from peer Scania <SCVb.ST>.
"Talk that it could come to a merger in the coming weeks are
getting stronger," a Frankfurt-based trader said.
"Things seem to become more imminent," another trader added.
ARM Holdings <ARM.L> gained 6 percent, with traders citing a
BofA Merrill Lynch upgrade on the British chip designer as the
main influence.
On the downside, British bank Lloyds <LLOY.L> fell 4.5
percent after it said its margins would not improve this year and took a 4 billion-pound ($6.5 billion) hit from bad debts in
Ireland. []
Across Europe, the FTSE 100 <> index was up 1.4
percent, but the UK exchange only started trading at 1215 GMT
instead of 0800 GMT, with the London Stock Exchange <LSE.L> blaming a technical glitch.
Germany's DAX <> was 0.8 percent higher, and France's
CAC 40 <> was up 1.5 percent.
(Additional reporting by Simon Jessop; Editing by Will Waterman) ((joanne.frearson@thomsonreuters.com; +44 207 542 2773; Reuters
Messaging: joanne.frearson.thomsonreuters.com@reuters.net))
