European stocks gain; banks, commodities rise

                                
 * FTSEurofirst 300 up 0.4 percent
                                
 * Banks recover after initial falls
                                
 * U.S. new housing starts jump
                                
 
                                
 By Joanne Frearson
                                
 LONDON, July 17 (Reuters) - European shares were higher in
early afternoon trade on Friday with banks recovering after
initial falls following Citigroup <C.N> results, while new U.S.
housing starts jumped mored than expected.
                                
 By 1306 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was up 0.4 percent at 870.56 points, having
fallen earlier to 865.82 points.
                                
 The index is up 6.9 percent this week, and on track for its
best weekly gain since November.
                                
 The banking sector was mixed. HSBC <HSBA.L>, BNP Paribas
<BNPP.PA> and Barclays <BARC.L> were up 1.3-1.8 percent, while
Credit Suisse <CSGN.VX>, Bank of Ireland <BKIR.I> and Lloyds
Banking <LLOY.L> were down 0.5-4.8 percent.
                                
 "Banks have been sold off a little bit on the back of
Citigroup results which has slightly knocked Europe off its
high," said Mark Priest, head of equity sales at ETX Capital.
                                
 "But, we are still seeing a bullish trend at the moment,
figures have to be really awful to be completely sold off."
                                
 Citigroup reported a $4.3 billion second-quarter profit
thanks to gains on its Smith Barney deal. [ID:nN17470666]
                                
 But stripping out the one-off gain from the brokerage
venture, Citigroup had a loss of 26 cents a share, narrower than
analysts' consensus forecast of a 31 cent loss.
                                
 Meanwhile, Bank of America Corp's <BAC.N> quarterly profit
topped Wall Street forecasts, but the largest U.S. bank warned
of a fresh surge in troubled loans from credit card, mortgage
and business customers due to the weak economy. [ID:nN17468434]
                                
 General Electric Co <GE.N> said profit fell by almost half,
on a deeper drop in revenue than Wall Street expected, as the
slump that has gripped its finance and media businesses took
hold of its heavy industrial units. [ID:nN17269520]
                                
 Commodity stocks were the top performers on the pan-European
index. BG Group <BG.L>, BP <BP.L>, Royal Dutch Shell <RDSa.L>
and Total <TOTF.PA> were up 0.3-1.6 percent.
                                
 Among miners, Antofagasta <ANTO.L>, BHP Billiton <BLT.L>,
Eurasian Natural Resources Corporation <ENRC.L>, Rio Tinto
<RIO.L> and Xstrata <XTA.L> were 0.5-5.5 percent higher.
                                
 Looking at macroeconomic data, new U.S. housing starts and
permits jumped more than expected in June, propelled by a rise
in single-family homes, a government report showed.
[ID:nN17472008]
 (Editing by Dan Lalor)