* FTSEurofirst <> adds 2 percent in global rally
* Receding oil prices sooth inflation fears
* Banks lead rally
By Rebekah Curtis
LONDON, July 23 (Reuters) - European stocks joined a global
rally early on Wednesday, rising 2 percent as banks surged and
sliding oil prices soothed investors seeking relief from
inflationary pressures and global growth concerns.
Banks were the top gainers, with HSBC <HSBA.L> up 3.2
percent, Royal Bank of Scotland <RBS.L> jumping 7.9 percent and
BNP Paribas <BNPP.PA> putting on 4.4 percent.
HBOS <HBOS.L> soared 11 percent on market talk of bid
interest from Spanish rival BBVA <BBVA.MC>, traders said.
Neither HBOS or BBVA was available for comment.
Crude oil fell to $126 a barrel. Energy shares staged a
mixed performance, with BP <BP.L> and Total <TOTF.PA> down
0.2-0.4 percent, while Royal Dutch Shell <RDSa.L> added 0.4
percent.
"We can start to think about inflation pressure easing,"
Philip Isherwood, a strategist at Dresdner Kleinwort, said
referring to the decline in oil prices.
"It starts to take some of the pressure off central banks
and (let) them think more about economic weakness than about
inflation expectations."
At 0902 GMT, the pan-European FTSEurofirst 300 index
<> was up 2 percent at 1,187.91. Major Wall Street stock
indexes rose more than 1 percent on Tuesday and Japan's Nikkei
<> added 1 percent on Wednesday.
Mobile phone group Vodafone <VOD.L> was a major positive
weight on the market, up 4.1 percent after announcing a surprise
1 billion-pound ($2 billion) share buyback programme, saying a
big share price fall in the wake of Tuesday's trading update
left the stock undervalued.
Britain's FTSE 100 <> added 1.8 percent, Germany's DAX
<> rose 1.4 percent and France's CAC <> added 1.9
percent.
PEUGEOT GAINS
Europe's second-biggest car maker, PSA Peugeot Citroen
<PEUP.PA>, added 9.5 percent after it stuck to its operating
profit margin target for 2008 as first-half earnings rose more
than expected on the back of cost cuts. []
But shares in Volvo <VOLVb.ST> fell 3.3 percent after the
world's second-largest truck maker said it saw signs a U.S.
slowdown was spreading across the Atlantic to its biggest
market, Europe. The firm's second-quarter pretax profit beat
market forecasts, while the operating profit matched consensus.
Airlines joined in on the rally, helped by falling crude
prices. Air France-KLM <AIRF.PA> added 5.7 percent, British
Airways <AIRF.PA> gained 3.9 percent and Lufthansa <LHAG.DE>
rose 3.7 percent.
Friends Provident <FP.L> was a standout gainer on Britain's
FTSE 100, up 6.1 percent after Goldman Sachs added the stock to
its "pan-European buy list".
But Norwegian telecoms company Telenor <TEL.OL> dropped 3.6
percent, the biggest percentage loser in Europe, after reporting
a surprise 1.5 percent fall in second-quarter core earnings and
cut its 2008 revenue growth target as resurgent inflation in
emerging markets crimps spending on telephony.
Later in the session investors will eye results from a slew
of U.S. companies, including Anheuser-Busch <BUD.N>, Boeing
<BA.N>, Hershey <HSY.N> and Pfizer <PFE.N>. They will also
likely cast an eye on the Federal Reserve's Beige Book summary
of economic conditions, which is due to be released after the
close of European markets.
(Editing by Paul Bolding)
