* FTSEurofirst 300 <> ends week 3.2 percent higher
* Banks lead gainers, pushed higher by Citi Q2
* Delhaize warning knock food retailers
By Patrizia Kokot
LONDON, July 18 (Reuters) - European shares ended sharply
higher on Friday after better-than-expected earnings from U.S.
bank Citigroup <C.N> spurred a rally in financial stocks.
The FTSEurofirst 300 index <.FTEU> of top European shares
closed 1.56 percent higher at 1,164.19 points, having fluctuated
between 1,133.28 and 1,163.71 during the day.
The index gained around 3.2 percent during the week, but has
lost about 23 percent so far this year.
Citigroup, the largest U.S. bank, posted a smaller-than-
expected $2.5 billion loss, sending the DJStoxx European banks
index <.SX7P> 4.9 percent higher.
UBS <UBSN.VX> jumped 7.6 percent and Royal Bank of Scotland
<RBS.L> soared 9.6 percent.
"Citigroup created a huge amount of positive excitement for
the very reason that (the results) are not as bad as expected
and the markets gave them the benefit of the doubt," said Howard
Wheeldon, senior strategist at BGC Partners.
The oil price holding around $130 a barrel and banks gaining
ground for the third consecutive trading day after a string of
better-than-expected earnings raised hopes that the worst of the
credit crunch may be over.
"I think we are well into the second half of this bear
market but there are still plenty of shocks to come," BGC
Partner's Wheeldon added.
PHARMAS GAIN GROUND ON BARR-TEVA DEAL
After banks, pharmaceuticals were prominent gainers on
Friday following the announcement of a $7.5 billion acquisition
of generic drugmaker Barr <BRL.N> by Teva Pharmaceutical
Industries <TEVA.O>. The deal implies a 42 percent premium to
Barr's closing price on Wednesday and prompted market watchers
to wonder whether pharma stocks are undervalued.
Stada <STAGn.DE> rose 2.5 percent, Roche <ROG.VX> added 1.6
percent and Sanofi-Aventis <SASY.PA> gained 2.1 percent.
Earnings in Europe were largely confined to the Nordic
countries, with Swedish Match <SWMA.ST> adding 5.5 percent after
the tobacco products maker released a solid set of
second-quarter results.
SBM Offshore <SBMO.AS> clocked up 7.5 percent as the Dutch
maritime engineering group got two orders worth a combined $230
million and could get a bigger contract in 2009, according to
analysts.
Spain's Union Fenosa <UNF.MC> surged 10.4 percent, following
Thursday's 16 percent advance, after core shareholder ACS
<ACS.MC> confirmed there are several interested buyers for its
45.3 percent stake.
A profit warning from Belgian supermarket chain Delhaize
<DELB.BR> dented food retailers and producers.
Delhaize lost 8.2 percent, while peers Ahold <AHLN.AS> and
Carrefour <CARR.PA> were down 3.5 percent and 0.2 percent
respectively and Tesco <TSCO.L> fell 3.3 percent.
L'Oreal <OREP.PA> fell 2.07 percent after issuing a warning
on sales. Nestle <NESN.VX>, a large shareholder in L'Oreal, fell
2.8 percent.
Other notable fallers included Swedish engineering group
Sandvik <SAND.ST>, which lost 2.6 percent as its second-quarter
pretax profit and order intake missed expectations.
Miners also weighed on the market as metal prices eased.
Anglo American <AAL.L> was down 1.1 percent, Rio Tinto <RIO.L>
ended 1.3 percent lower and BHP Billiton <BLT.L> lost 1.8
percent.
(Editing by Erica Billingham)
