* FTSEurofirst 300 index ends up 0.1 percent
* Miners higher on China manufacturing data, weak dollar
* Banks fall on nerves ahead of Fed announcement Wednesday
By Harpreet Bhal
LONDON, Nov 1 (Reuters) - European shares edged up on
Monday, with enthusiasm over a pick-up in manufacturing growth
just offsetting nerves ahead of a U.S. Federal Reserve meeting
likely to outline the central bank's monetary easing plans.
The pan-European FTSEurofirst 300 <> index of top
shares ended 0.1 percent higher at 1,088.01 points -- a near
one-week closing high -- but pared gains from earlier in the
session when it hit a high of 1,094.74 points.
Sentiment was boosted by data showing surprisingly strong
growth in the U.S. manufacturing sector last month, as well as
upbeat manufacturing purchasing managers index (PMI) numbers in
China earlier in the session.
"These PMIs suggest that there's a bit of a momentum pickup.
Although the numbers were good, I still think there is a strong
sense that the Fed is going to go ahead with QE anyway," said
Mike Lenhoff, chief strategist at Brewin Dolphin.
Mining shares rallied, with the STOXX Europe 600 basic
resources index <.SXPP> up 1.2 percent, after metals prices were
boosted by the upbeat manufacturing numbers and as the dollar
was pressured by expectations that the Fed will embark on more
quantitative easing measures this week.
Despite widespread expectation that the Fed will announce
further quantitative easing when it concludes its two-day
meeting on Wednesday, uncertainty lingered over how much it will
eventually spend -- with estimates ranging from $250 billion to
as high as $2 trillion [].
Banks -- a barometer of investors' risk appetite -- were on
the back foot, with Societe Generale <SOGN.PA>, BNP Paribas
<BNPP.PA> and Deutsche Bank <DBKGn.DE> down 0.7 to 1.1 percent.
"Stocks initially benefited from the Chinese manufacturing
data. But the market was a lot stronger than anticipated, and
investors are now taking profits ahead of the Federal Open
Monetary Committee announcement on Wednesday," said Heino
Ruland, strategist at Ruland Research in Frankfurt.
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC 40 <> were up 0.1 to 0.3 percent.
QE BOOST
The pan-European FTSEurofirst 300 added 2.4 percent in
October partly on expectations that the Fed will print more
money to spur the recovery, with the mining sector among the
biggest beneficiaries as quantitative easing expectations put
pressure on the dollar and lifted commodity prices.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic on asset returns since QE2 hints, please
click on http://r.reuters.com/kyw48p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Analysts, however, caution that the equity market could be
in for a bout of profit-taking once the Fed makes its
announcement on monetary easing plans.
"So much is already priced in the market and once it is all
over and done with and they (the Fed) have released the news, we
could see a bit of a sell-off," Lenhoff said.
Among individual movers, Europe's largest low-cost airline,
Ryanair <RYA.I> <RYA.L>, slipped 3.8 percent. It failed to wow
investors with an upgrade to its full-year earnings forecast
after missing market forecasts for second-quarter net profit.
[]
Mail and express group TNT <TNT.AS> fell 4.2 percent after
the Dutch company posted worse-than-expected results, dragged
down by restructuring, pension and other costs in its mail unit.
On the upside, Portuguese retailer Jeronimo Martins <JMT.LS>
rose 4.7 percent after the Lisbon government and opposition
reached an agreement on the 2011 budget and left value-added tax
on most basic foodstuff at lower rates [].
The agreement on Saturday helped avert a political crisis in
one of the euro zone's financially weakest members.
(Additional reporting by Joanne Frearson; Editing by David
Cowell)
