By Eva Kuehnen
FRANKFURT, Feb 4 (Reuters) - European shares rose for a
third consecutive session on Monday as investors favoured
industrial and automotive stocks and shrugged off renewed growth
concerns in the United States.
Among major movers were Royal Bank of Scotland <RBS.L>,
which rose by more than 4 percent after a report that the bank
could sell assets including its minority stake in Bank of China
<3988.HK>.
The pan-European FTSEurofirst 300 index <> closed 0.2
percent higher at 1,356.20 points, having fallen by as much as
0.2 percent to the day's low at 1,351.49 and erasing an earlier
rise to the day's high at 1,367.24, which marked a gain of 1
percent.
"This is a brief technical recovery and I wouldn't see this
as a change of direction," said Christian Stocker, equity
strategist at UniCredit Global Research, referring to the recent
equity selloff.
The index rose 1.8 percent last week, but has lost about 10
percent since the beginning of the year as investors fret about
a looming U.S. recession and the knockon effects on the global
economy.
Sentiment on Wall Street turned sour again after merger and
acquisition activity boosted indices last week, amid brokerage
downgrades of companies and data showing new orders at U.S.
factories rose less than expected in December.
"We expect to see further volatility ahead and we don't
think that we've hit the floor just yet," Stocker said, adding
that the signal for a sustainable recovery would most likely
come from the financial sector.
"A solution to the monoline insurer problem in the United
States would be extremely helpful for the market," he said.
A group of large banks has joined together to find ways to
shore up Ambac Financial Group Inc <ABK.N>, a large bond insurer
battered by the global credit crunch, two people briefed on the
talks said on Friday.
Another group is looking at ways to rescue other bond
insurers, one of the people said.
Bond insurers, which guarantee more than $2.4 trillion of
debt, are expected to suffer billions of dollars of losses after
insuring repackaged subprime mortgages. They are looking to
raise capital to protect their credit ratings.
Insurers were among the strongest negative weights on the
European benchmark index and the DJ Stoxx insurance sector index
<.SXIP> fell 0.4 percent.
The UK's FTSE 100 index <> fell 0.1 percent, Germany's
DAX index <> added 0.5 percent and France's CAC 40
<> dropped 0.1 percent.
DEFENSIVES LESS ATTRACTIVE
Defensive stocks such as food producers, telecoms and
retailers were the strongest decliners around Europe.
The DJ Stoxx European food and beverages sector index
<.SX3P> fell 1.3 percent and the telecoms sector index <.SXKP>
shed 0.5 percent.
Shares in Carphone Warehouse <CPW.L> dropped 7.3 percent on
fears that BT Group's <BT.L> results, due on Thursday, would
show BT taking market share from the mobile phone retailer,
analysts said.
Vodafone <VOD.L> shares fell 1.9 percent.
UniCredit's Stocker said defensive sectors had gained most
in the previous selloff, as investors were looking for more
cautious investments. In the current market environment,
however, such stocks looked less attractive.
As a results, cyclical industrials and automotive stocks
were on the upside.
Vestas <VWS.CO> rose 7.7 percent after the world's top wind
power plant producer raised its 2007 sales and profit outlook.
Siemens <SIEGn.DE> added 1.6 percent after Goldman Sachs
upgraded the stock to "buy" from "neutral", while MAN AG
<MANG.DE> rose 3.6 percent ahead of the company's preliminary
annual earnings release, due on Tuesday.
On the M&A front, China's Chinalco said it was content with
the $14 billion stake it bought last week in miner Rio Tinto
<RIO.L>, dousing talk it was planning a rival bid to BHP
Billiton's <BLT.L> offer for Rio.
Rio shares dropped 1.3 percent, while BHP added 1.7 percent.
Other miners such as Anglo American <AAL.L> gained 1.2 percent,
Vedanta Resources <VED.L> rose 3 percent.
Oil majors such as Royal Dutch Shell <RDSa.AS> and Total
<TOTF.PA> added 0.8 percent and 0.6 percent respectively as the
oil price <CLc1> rose above $90 a barrel.
(Editing by David Holmes)
