* FTSEurofirst 300 up 0.5 pct; gains for 2nd day
* Risk appetite rises; volatility index hits 15-month low
* Banks, pharma among top gainers; commods advance
* Moody's cuts Greece rating, but Greek banks up
By Atul Prakash
LONDON, Dec 22 (Reuters) - European shares advanced for a
second straight session in thin pre-Christmas trading on
Tuesday, led higher by financials and drugmakers, with investors
waiting for a slew of macro-economic data later in the day.
Investor appetite for risky assets such as equities rose,
with the VDAX-NEW volatility index <.V1XI> hitting its lowest
level in more than 15 months. The lower the index, which is
based on sell and buy options on Frankfurt's top-30 stocks
<0#.GDAXI>, the higher the market's desire to take risk.
At 0903 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.5 percent at 1,032.75 points after
gaining 1.5 percent in the previous session. The benchmark index
is up 24 percent this year and has surged 60 percent since
hitting a record low in early March.
Banks were among the top gainers, with Barclays <BARC.L>,
Lloyds <LLOY.L>, Royal Bank of Scotland <RBS.L>, Societe
Generale <SOGN.PA>, UBS <UBSN.VX>, Credit Suisse <CSGN.VX> and
Natixis <CNAT.PA> rising 0.1 to 2 percent.
"We are going to have some pretty volatile sessions in the
last days of the year because volumes are low and there are
still quite some important figures that have to be published,"
said Koen De Leus, economist at KBC Securities.
Greek banks were also in demand, despite Moody's cutting the
country's debt to A2 from A1 over soaring deficits, becoming the
third major rating agency to downgrade the highly-indebted
country's rating this month.
Analysts said the latest downgrade was already priced in.
Greece's four biggest lenders -- National Bank <NBGr.AT>, EFG
Eurobank <EFGr.AT>, Alpha Bank <ACBr.AT> and Piraeus Bank
<BOPr.AT> -- were up 2.1 to 3.9 percent.
Drugmakers also gained. AstraZeneca <AZN.L>, GlaxoSmithKline
<GSK.L>, Novartis <NOVN.VX>, Roche Holding <ROG.VX> and Shire
<SHP.L> rose 0.3 to 0.7 percent.
GAINS CAPPED
European share markets were also supported by a rise in
Asian stocks, which gained across the board as technology stocks
tracked a rally in their peers on Wall Street that took the
Nasdaq to a 15-month high. Tokyo stock market rose to its
highest close in three months.
But gains in European equities were capped by poor
macro-economic indicators. The GfK market research group said
German consumer sentiment is likely to decline going into
January as consumers scale back their readiness to buy major
items. []
Investors awaited a series of U.S. macro-economic data later
in the session -- including a final reading of third-quarter
gross domestic product, existing home sales for November and the
Richmond Fed survey for December -- for a clearer direction.
Energy shares tracked crude <CLc1>, which edged up ahead of
an OPEC meeting. BP <BP.L>, Royal Dutch Shell <RDSa.L>, Tullow
Oil <TLW.L>, Repsol <REP.MC>, Total <TOTF.PA> and StatoilHydro
<STL.OL> added 0.4 to 1.4 percent.
Miners were broadly higher, with Anglo American <AAL.L>,
Antofagasta <ANTO.L>, Rio Tinto <RIO.L> and Eurasian Natural
Resources <ENRC.L> rising 0.7 to 1.4 percent.
BHP Billiton <BLT.L> was up 0.8 percent. It has pulled out
of a $2 billion nickel project in the southern Philippines after
selling its 40 percent stake to a local partner. []
Volumes were thin for Europe's benchmark index on Monday,
representing only 69 percent of the index's 90-day average daily
volume. In early trade on Tuesday, volumes were 9 percent of the
three-month average.
Across Europe, Britain's FTSE 100 index <>, Germany's
DAX <> and France's CAC 40 <> rose 0.3-0.6 percent.
(Editing by Mike Nesbit)
