* FTSEurofirst 300 index ends 1.8 pct higher
* Miners track stronger metals prices
* Financials strengthen after previous session losses
By Atul Prakash
LONDON, July 1 (Reuters) - European equities ended the first
session of the quarter in positive territory, with strong metals
prices on Wednesday boosting mining shares, while banks rose
after slipping in four of the past seven days.
The FTSEurofirst 300 <> index of top European shares
closed 1.8 percent higher at 865.66 points after falling 1.1
percent on the last day of the second quarter.
But the benchmark index, which slumped 45 percent in 2008,
gained nearly 16 percent in the second quarter, its best
performance since late 1999.
Miners got strength from a 3 percent rise in copper prices,
2 percent higher aluminium prices and a 6 percent hike in
nickel.
BHP Billiton <BLT.L>, Anglo American <AAL.L>, Antofagasta
<ANTO.L>, Rio Tinto <RIO.L>, Xstrata <XTA.L> and Eurasian
Natural Resources <ENRC.L> rose between 2.5 and 6.3 percent.
India-focused mining group Vedanta <VED.L> rose 9.9 percent
after the London-listed company said it has boosted the size of
its share buy-back programme by 40 percent to $350 million.
"Resource stocks are a good barometer of global economic
sentiment and today the miners and energy firms are the standout
performers," said David Evans, analyst at BetOnMarkets.com.
Energy shares were among the top gainers as crude <CLc1>
jumped 2.5 percent to trade above $71 a barrel before
surrendering gains in the late afternoon session.
BP <BP.L>, Royal Dutch Shell <RDSb.L>, BG Group <BG.L>,
Tullow Oil <TLW.L>, Repsol <REP.MC>, Total <TOTF.PA> and
StatoilHydro <STL.OL> added between 1.4 and 4.2 percent.
Among the banks, Commerzbank <CBKG.DE> surged 18.6 percent
after the parliamentary parties in Germany's ruling coalition
backed a plan to establish "bad banks" for struggling lenders,
which the government hopes will spur lending and reinvigorate
the economy. []
Other banks also advanced, with Standard Chartered Bank
<STAN.L>, HSBC <HSBA.L>, Barclays <BARC.L>, Royal Bank of
Scotland <RBS.L>, BNP Paribas <BNPP.PA> and Deutsche Postbank
<DPBGn.DE> up 1.4 to 8.8 percent.
Across Europe, the FTSE 100 index <>, Germany's DAX
<> and France's CAC 40 <> were 2.0 to 2.4 percent
higher.
CAUTIOUS APPROACH
Despite Wednesday's sharp rally in stocks, some analysts
advised caution ahead of the second-quarter company results.
Latest macroeconomic data also dampened hopes the economy was
emerging from its worst slump since the Great Depression.
Figures showed that U.S. private employers cut almost half a
million jobs in June and mortgage applications fell to a
seven-month low last week.
The news supported other evidence from Europe and Asia that
a broad recovery would be slow in coming, as euro zone
manufacturing activity contracted in June, with Germany lagging
behind other nations, and Japanese business morale disappointed.
The U.S. manufacturing sector shrank in June but at a slower
pace than during the prior month, according to a report by the
Institute for Supply Management. []
"The major indices have been consolidating for one to two
months, so it wouldn't surprise me if that pattern continued in
the next month or two," said Andrew Bell, head of research at
Rensburg Sheppards.
"The test is going to come in the next few weeks as the
second quarter earnings numbers will start to come in. They are
unlikely to be great but the question is will the accompanying
trading statements be encouraging, against the very cautious
statements we had in April."
Carrefour <CARR.PA> rose 5.7 percent after the world's
second-biggest retailer unveiled a plan to save 4.5 billion
euros by 2012 to boost profits at the group. []
Britain's Marks & Spencer <MKS.L> rose 3.8 percent after
posting a smaller-than-expected drop in first-quarter underlying
sales.
(For a Factbox on European stock market performance in H1,
please double click on [])
(Editing by Karen Foster)
