* FTSEurofirst 300 rises 3.1 pct
* Banks gain on coordinated govt measures
* Oils advance as crude trades up
By Brian Gorman
LONDON, Oct 14 (Reuters) - European shares closed higher on
Tuesday, led by banks and oil stocks as world governments took
steps to stem a global financial crisis, but some earlier gains
were lost as a U.S. rally dwindled on concerns for the economy.
The pan-European FTSEurofirst 300 index <> closed up
3.1 percent at 966.12 points, adding to a more than 10 percent
rally on Monday when it posted its biggest ever daily percentage
rise. However, it had been up as much as 6.5 percent earlier in
the session, before the U.S. opened. The index has lost 35.8
percent this year.
Banking stocks helped to boost the index. Credit Suisse
<CSGN.VX> rose 15.2 percent; Barclays <BARC.L> surged 14.3
percent, UBS <UBSN.VX> added 12 percent, Standard Chartered
<STAN.L> put on 10.5 percent, and Societe Generale <SOGN.PA>
rose 8.2 percent.
President George W. Bush said the U.S. government would
directly inject capital into financial institutions by buying
equity stakes in a bid to help thaw credit markets frozen by the
housing market collapse.
"This is an essential short-term measure to ensure the
viability of America's banking system," he said after meeting
with his top economic advisers, adding that the new capital
would encourage banks to lend again, which would spur job
creation and economic growth.
The U.S. move follows a similar concerted European drive
announced on Monday.
But U.S. stocks, which posted double-digit percentage gains
on Monday, were mostly negative when European bourses were
closing for the day, as U.S. investors fretted over the outlook
for corporate profits.
"The American market is pleased about the rescue plan for
banks, but industrials have taken a bit of a beating today,"
said Roger Cursley, a strategist at Investec. "We're looking at
difficult economic times ahead. And then there's the problems
with Dexia <DEXI.BR>." The multinational Belgian bank Dexia
ended the day 15.5 percent lower as it denied rumours it was on
the verge of nationalisation.
Across Europe, Britain's FTSE <> was up 3.2 percent,
Germany's DAX <> rose 2.7 percent, and France's CAC
<> added 2.8 percent.
"There's a bit of bottom fishing, but it all feels a bit
technical," Cursley added.
"We need a period of lower volatility. Nobody can live with
10 percent gyrations, one way or the other. It's hard to put a
valuation on anything. Nobody wants to take a chunky position as
you can be so wrong, so fast."
FORTIS DROPS
Belgian-Dutch financials services group Fortis NV
<FOR.AS><FOR.BR> sank nearly 78 percent as it resumed trade
after being suspended since Oct. 3.
The group outlined a drastically reduced business structure
after its carve-up and nationalisation, and asked on Tuesday to
be exempt from reporting its forthcoming quarterly results.
Analysts said fears of a looming global recession were not
dead, but for now the sweeping emergency steps being enacted by
governments reduced the risk of financial system failure.
British consumer price inflation hit a 16-year high of 5.2
percent in September, while a survey showed German investor
sentiment worsened by more than expected this month due to the
financial crisis.
Energy shares were the biggest weighted sectoral gainer on
the FTSEurofirst 300 index, even as gains in crude oil faded.
Tullow Oil <TLW.L> rose 8.9 percent, while BP <BP.L>, Royal
Dutch Shell <RDSa.L> and Total <TOTF.PA> rose between 5.5 and
7.3 percent. Gold also gave up sharp gains, as the dollar edged
off lows against the euro.
(Additional reporting by Atul Prakash and Rebekah Curtis,
editing by Will Waterman)
