By Blaise Robinson
PARIS, Jan 8 (Reuters) - European stocks rose in early trade
on Tuesday in a broad-based rally, bouncing back from a recent
drop as hopes of U.S. interest rate cuts helped overshadow
lingering worries about the prospect of a recession.
Shares in sectors seen better positioned to withstand a
potential economic slowdown gained ground, led by big
pharmaceutical groups which extended Monday's gains.
Both GlaxoSmithKline <GSK.L> and Roche <ROG.VX> rose 1.9
percent, while Sanofi-Aventis <SASY.PA> added 1.5 percent.
By 0925 GMT, the FTSEurofirst 300 index <> of top
European shares was up 0.6 percent at 1,466.7 points.
"We're seeing a switch into defensive stocks," said Achim
Matzke, European stock indexes analyst at Commerbank, in
Frankfurt.
"That could go on until the next Fed meeting at the end of
the month. Meanwhile, we expect that corporate results will come
more into focus as the earnings season will start in the next
few days. We're expecting a mixed picture on that front," he
said.
Mining shares were among the biggest gainers, rising along
with base metal prices such as copper, while gold hit a fresh
record of $872.10 per ounce.
Rio Tinto <RIO.L> gained 2 percent, Anglo American added 2.2
percent and Xstrata <XTA.L> rose 2.5 percent.
Shares of car makers gained, with France's Peugeot <PEUP.PA>
up 2.2 percent after reporting strong sales. Daimler <DAIGn.DE>,
whose premium Mercedes-Benz cars division posted a 2 percent
rise in 2007 sales, added 0.7 percent.
Europe's benchmark index is still down 2.6 percent since the
start of 2008, as disappointing U.S. jobs figures sparked
concerns that the world's largest economy could tip into
recession.
"The market is torn between two factors: fears of a U.S.
recession on both the earnings and the macroeconomic fronts, and
hopes that the Fed will cut rates aggressively. The latter
factor could underpin the market," said Franz Wenzel, strategist
at AXA Investment Managers, in Paris.
The U.S. Federal Reserve's next rate decision is expected on
Jan. 30.
According to a Reuters poll, the Federal Reserve will cut
interest rates by at least a quarter percentage point this
month, with a growing number of Wall Street firms seeing a
chance of an even bigger cut following Friday's dismal
employment report.
Interest rate decisions by both the European Central Bank
and the Bank of England are due on Thursday.
Around European markets, Germany's DAX index <> was up
0.5 percent, the UK's FTSE 100 index <> was up 0.6 percent
and France's CAC 40 <> was up 0.8 percent.
Shares in British recruitment firm Michael Page
International <MPI.L> surged 8 percent after it said it remains
confident about its prospects and reported a 38 percent jump in
quarterly gross profit.
On the macroeconomic front, investors will keep an eye on
U.S. home pending sales data, expected at 1500 GMT, that could
give clues on the outlook for the troubled housing market.
(Editing by Rory Channing)
