By Sitaraman Shankar
LONDON, Feb 18 (Reuters) - European shares rose in early
trade on Monday as gains in British banks and oil stocks helped
investors claw back some of the sharp losses suffered in the
last session.
At 0900 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.8 percent at 1,320.0 points.
Banks were the top gainers, with Barclays <BARC.L>, Royal
Bank of Scotland <RBS.L>, HBOS <HBOS.L> and Lloyds TSB <LLOY.L>
gaining 3-4 percent after the British government decided to
nationalise Northern Rock <NRK.L> and on dividend hopes.
Credit Suisse <CSGN.VX> rose 2.5 percent, boosted by an
agency report that Qatar had bought shares in the company.
Oil stocks tracked crude prices higher, with BP <BP.L> up
1.3 percent and Royal Dutch Shell <RDSa.L> up 1.4 percent.
Analysts said that stock rallies would be brief and the
overall tone in the market was still negative in the wake of
bank write-downs stemming from the credit crisis.
"This is a bear market, and there will be some rallies in
it," said Justin Urquhart Stewart of 7 Investment Management.
"The focus this week is going to be on the banks, as
investors scrutinise their results to see if they've put off
balance sheet things that should actually be on balance sheet,
and whether we've actually been led a merry dance."
Scandal-hit French bank Societe Generale <SOGN.PA> and peer
BNP Paribas <BNPP.PA>, as well as Britain's Barclays, report
results later this week.
Britain's FTSE 100 <> rose 1.1 percent, Germany's DAX
<GDAXI> rose 0.9 percent and France's CAC <> gained 1
percent.
U.S. markets are closed for Presidents Day.
"SLIGHT" POSITIVE
The British government announced the temporary
nationalisation of troubled bank Northern Rock on Sunday,
rejecting two rival bids to take it over.
"This is slightly positive for the sector as the expected
managed decline in the Northern Rock balance sheet should create
less competitive mortgage market conditions," Robert Sage, Bear
Stearns analyst, wrote in a note.
The stocks were also boosted by a report in The Sunday Times
that said Lloyds TSB <LLOY.L> and Barclays <BARC.L> would likely
increase their dividends when they report their results this
week.
Telecom Italia <TLIT.MI> fell 2.5 percent on a newspaper
report that its main shareholders are considering a capital
increase.
Aldo Minucci, chairman of holding company Telco, on Sunday
denied that the holding had scheduled "meetings to examine
possible extraordinary operations on Telecom Italia".
Swiss bank UBS <UBSN.VX> fell 2 percent, adding to sharp
falls last week, after HSBC cut its price target for the stock
and Bear Stearns downgraded it.
The FTSEurofirst 300 has fallen less than 1 percent so far
this month, a small fall compared to a torrid January when it
lost 12 percent.
Stocks have staged a mini-rally since Jan. 22, the day the
U.S. Federal Reserve cut interest rates, but are still off 20
percent from a multi-year peak hit last July, a drop that
defines a bear market for many analysts.
(Additional reporting by Steve Slater; Editing by Paul Bolding)
