By Atul Prakash
LONDON, Sept 12 (Reuters) - European shares jumped early on
Friday, as investors bought banking shares on optimism that
talks about a possible sale of U.S. investment bank Lehman
Brothers <LEH.N> would help ease the financial sector's woes.
Energy shares advanced, tracking crude prices, which jumped
1 percent to trade above $102 a barrel as the market kept a
watchful eye on the path of Hurricane Ike that could disrupt
refineries and production in the United States for weeks.
By 0907 GMT, the FTSEurofirst 300 <> index of top
European shares was up 1.2 percent at 1,154.80 points. The
benchmark closed 0.65 percent lower on Thursday and is down 24
percent so far this year.
European stock markets were hit in the previous two sessions
after Lehman posted a record quarterly loss of about $4 billion
and said it planned to sell a majority stake in its investment
management division and spin off commercial real estate assets.
"Lehman is up in Frankfurt, which is a good sign. There are
persistent rumours of an offer waiting in the wings for the
bank. Investors are also hunting for bargains," said Tom
Hougaard, chief market strategist at City Index.
Lehman <LHMH.F> shares rose as much as 23 percent in
Frankfurt after plunging more than 40 percent in the U.S. market
on Thursday. The shares have lost more than three-quarters of
their value since Monday and more than 90 percent since last
November.
Banks were one of the top weighted gainers on the index,
with BNP Paribas <BNPP.PA> gaining 2.7 percent, Dexia <DEXI.BR>
rising 3.5 percent and Credit Agricole <CAGR.PA> advancing 3.4
percent.
"The whole banking sector will be thrown into the spotlight
in Europe, with Spain's Banco Santander muscling in on Deutsche
Bank's bid for Postbank," said David Buik, strategist at BGC
Partners.
Shares in Deutsche Postbank <DPBGn.DE> rose 2.6 percent in a
flurry of excitement about an expected sale of a big stake to
Deutsche Bank <DBKGn.DE> that could be announced on Friday.
Breaking weeks of silence, Banco Santander <SAN.MC> said it
was interested in buying 100 percent of Postbank and could make
an indicative offer subject to looking at the books.
Britain's FTSE <> rose 1.5 percent, Germany's DAX
<> gained 1 percent and France's CAC <> was up 1.6
percent.
COMMODITY PRICES
Mining shares gained on a rebound in metals prices and a
boost in sentiment. Copper <MCU3> rose 2 percent, aluminium
<MAL3> was up 1.2 percent and gold <XAU=> advanced 2 percent.
The DJ Stoxx European basic resources index <.SXPP> climbed
4.4 percent and the UK mining index <.FTNMX1770> rose 5.2
percent.
Xstrata <XTA.L> was up 5.7 percent and Anglo American
<AAL.L> climbed 5 percent. Takeover target Rio Tinto <RIO.L> and
its suitor BHP Billiton <BLT.L> rose 6.3 percent and 5.6 percent
respectively.
Oil shares also strengthened with a rise in crude prices. BP
<BP.L>, Royal Dutch Shell <RDSa.L>, gas producer BG Group <BG.L>
and Tullow Oil <TLW.L> added between 1.4 and 3.5 percent.
ASML <ASML.AS> fell 1.8 percent as JPMorgan cut its price
target on the group to 12 euros from 16 euros.
Shares in German mail and logistics group Deutsche Post
<DPWGn.DE> rose 1.9 percent, making them among the top gainers
on the DAX <> on expectations it will announce on Friday
the sale of a big stake in subsidiary Deutsche Postbank
<DPBGn.DE>.
(Additional reporting by Joanne Frearson; Editing by Paul
Bolding)
