* FTSEurofirst 300 index ends 2.7 percent higher
* Biggest one-day rise since April 1
* Banks launch into relief rally, techs soar on Nokia
outlook
By Patrizia Kokot
LONDON, July 17 (Reuters) - European stocks staged a sharp
rally on Thursday as a solid outlook from bellwether Nokia
<NOK1V.HE> and surprisingly strong results from JPMorgan <JPM.N>
spurred a relief rally led by the banking sector.
The FTSEurofirst 300 index <> closed 2.7 percent
higher at 1,145.87 points, after brushing an intra-day high of
1,154.72 earlier in the session. The day's advance was the
largest since April 1.
Yet analysts and strategists were uncertain whether
Thursday's rally marked a significant turnaround.
"The banks have fallen so much recently that you have to
wonder whether they are overdone," strategist Bernard McAlinden
at NCB Stockbrokers in Dublin said.
"The interesting thing is that if you look at U.S. banks
during the past 30 to 35 years then banks are now as low as they
have been", he added, noting: "This may be a very advanced
long-term clue that the worst may be over".
Banks rebounded from early in the session with the DJ Stoxx
European banks index <.SX7P> soaring 5.4 percent, supported by
unexpectedly strong results from JPMorgan. UBS <UBSN.VX> rose
7.9 percent, Deutsche Bank <DBKGn.DE> gained 6.9 percent and BNP
Paribas <BNPP.PA> was up 6.1 percent.
Tech stocks were also in the spotlight after Finnish handset
maker Nokia raised its outlook, although analysts agreed that
the rest of the bellwether's earnings report showed a mixed
picture. The average selling price (ASP) for handsets was below
forecasts and earnings per share were disappointing.
NEGATIVE SENTIMENT
"It's normally very negative when ASP and margins fall short
of expectations, but sentiment was so negative that it is now
enough for them to say that the market is growing," analyst
Nicolas von Stackelberg at Sal Oppenheim said.
The stock added almost 8 percent, with peers Ericsson
<ERICb.ST> and Alcatel-Lucent <ALUA.PA> rising 6.2 and 1.9
percent respectively. Ericsson will be in focus on Friday when
its joint venture with Sony <6758.T> reports.
Nokia's outlook also led to a rally in supplier
semiconductor stocks such as Infineon <IFXGn.DE>, up 9.6 percent
and ARM Holdings <ARM.L>, up 14.3 percent.
The tech sector <.SX8P> as a whole clocked up 5.5 percent.
Whether or not the rebound in the broader equity market
represents the beginning of a significant turnaround was a hot
topic through the session, with Goldman Sachs declaring it
believes the "market is within 5 percent of fair value".
NCB's McAlinden added the level of crude oil is set to
remain in the spotlight. "A lot depends on oil. If it comes back
down below $130 than it is more than a short-term rally," he
said, adding: "It was the oil price that rudely interrupted the
rally in March".
Crude held above $136 a barrel during the session, yet was
well off recent highs. Heavyweights BP <BP.L>, Shell <RDSa.L>
and Total <TOTF.PA> rose between 0.8 and 2 percent.
Other notable gainers included Union Fenosa <UNF.MC>, up 16
percent after construction group ACS <ACS.MI> confirmed it is
considering the sale of its 45.3 percent stake in the Spanish
utility. Any buyer of the stake would be obliged to make a full
bid for Fenosa.
Decliners included Essilor <ESSI.PA>, which shed 8.4 percent
after the French maker of eyeware disappointed investors with
weak second-quarter sales.
Pharmaceuticals and other healthcare stocks took a breather
from recent gains and Fresenius Medical Care <FMEG.DE> retreated
4.6 percent, after its parent company Fresenius SE <FREG_p.DE>
said it will issue a bond worth up to 600 million euros
exchangeable into FMC shares, which will reduce its holding to
around 30 from 36 percent.
(Editing by David Holmes)
