By Amanda Cooper
LONDON, Feb 26 (Reuters) - Financial stocks drove European
shares up on Tuesday after Standard Chartered <STAN.L> delivered
upbeat results, but the outlook for the U.S. economy remained a
concern.
Asia-focused Standard Chartered hit a three-week high,
rising nearly 8 percent to top gainers on the broader European
market.
European insurers including Axa <AXAF.PA> and Allianz
<ALVG.DE> also featured among stocks on the rise as conviction
grew in the investment community that a rescue package for the
top U.S. bond insurers may be imminent.
The FTSEurofirst 300 index <> ended up 1.41 percent at
1,361.18 points, close to its day's high. Advancing issues
outnumbered decliners by about 4.4 to one.
But U.S. data showed a sharp drop in consumer confidence
this month, while producer price inflation picked up by more
than expected in January, which did not augur well for future
consumer spending -- the engine of U.S. economic growth.
"In general, the fundamental picture is still not that
encouraging so we must place a big question mark on the
durability of the current upswing," said UniCredit analyst
Gerhard Schwarz.
The FTSEurofirst 300 has fallen by nearly 10 percent this
year and, with so much doubt lingering over the likelihood of a
U.S. recession, gains will be limited.
"We have to deal with uncertainties and that is certainly a
burden for the market going forward," Schwarz said. "Unless we
get a clear indication out of the U.S. that the worst is over,
that will weigh on the market."
BOOST FROM STANCHART
Standard Chartered beat forecasts with a 27 percent rise in
2007 profits and expects another strong year as Asian markets
are well placed to continue to outperform western economies.
This helped shares in HSBC <HSBA.L>, Royal Bank of Scotland
<RBS.L> and Banco Santander <SAN.MC> which gained between 2.6
and 4.2 percent.
Within the financial sector, Axa rose 3.7 percent and German
peer Allianz added 3 percent despite price target cuts from JP
Morgan, Lehman Brothers and UBS.
"These two sectors (banking and insurance) have been
absolutely cremated in the last few months," said Edmund Shing,
a strategist with BNP Paribas in Paris, adding the sectors were
recovering because it was not clear they had subprime problems.
Spanish construction and infrastructure company Ferrovial
<FER.MC> ranked among the top gainers on the FTSEurofirst 300,
rising nearly 9 percent as traders cited a short squeeze after
the company posted a 31 percent rise in 2007 core earnings.
The stock has fallen by 13 percent in the past two months
and had been lingering around three-year lows.
Fellow Spanish builder Sacyr Vallehermoso <SVO.MC> also
rallied, gaining around 5 percent.
Also among gainers was Deutsche Telekom <DTEGn.DE>, which
rallied 0.9 percent after Blackstone <BX.N>, the U.S. private
equity firm, said it may increase its 4.5 percent stake in the
German company.
Signals from the European economy continued to be mixed.
German corporate sentiment unexpectedly improved in
February, but British retail sales unexpectedly fell in February
for the first time in more than a year.
Around Europe, Britain's FTSE 100 <> was up 1.5
percent, Germany's DAX <> also rose 1.5 percent and
France's CAC 40 <> gained 1.1 percent.
Utilities were the largest drag on the FTSEurofirst 300 as
shares in Germany's E.ON <EONG.DE> fell 1.2 percent. Rival firms
Suez <LYOE.PA> and Spain's Gas Natural <GAS.MC> rallied after
both posted results that either met or beat expectations.
Suez shares were up 1.2 percent, while Gas Natural gained
2.1 percent.
Other decliners included Danish pharma group Novo Nordisk
<NOVOb.CO>, which fell 2.8 percent after a downgrade from Bear
Stearns.
(Additional reporting by Golnar Motevalli; Editing by David
Hulmes)
