European shares hit seven-week high

European shares closed at a seven-week high overnight as equities shook off two straight sessions of losses, with banks rallying and oil majors supported by firmer crude prices.

The pan-European FTSEurofirst 300 index of top shares closed up 0.6 per cent at 1,058.81 points, its highest closing level since January 19.

The index, which has gained 57 per cent since reaching a lifetime low in March last year, is up 1.2 per cent so far this year.

Banks were higher, with HSBC, Societe Generale, BNP Paribas , UBS and Deutsche Bank up 0.4 to 2.7 per cent. Greek banks were up almost 4 per cent.

Barclays gained 0.6 per cent. The bank was said to be looking to buy a retail bank in the United States to extend its presence after acquiring Lehman Brothers' North American operations in 2008, the Wall Street Journal reported.

Analysts said investors' confidence in equities was partly driven by positive economic data from the United States, notably the better-than-expected non-farm payrolls numbers in February, which reinforced the view that the economy was recovering.

"The news from the United States has generally been quite encouraging on the jobs front. It seems to have been enough to have drawn a lot of people into the market who were waiting for some confirmation of further activity," said Geoff Wilkinson, head of investment research at Mint.

Energy shares were higher, supported by a rally in crude prices, which rose more than US$1 to nearly US$83 a barrel after as stocks of the motor fuel in the United States dropped unexpectedly.

BP, BG, Royal Dutch Shell, Total and Repsol rose 0.9 to 1.5 per cent.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 rose 0.7 to 0.9 per cent.

Miners gain

Mining stocks were also higher, with metals prices supported by better-than-expected Chinese imports data, which raised hopes of a global economic recovery.

Anglo American, Eurasian Natural Resources, Kazakhmys, BHP Billiton and Xstrata gained 1.1 to 2.7 per cent.

On the downside, brewer Carlsberg fell 1.5 per cent amid renewed market talk that Russia may ban the sale of beer at kiosks.

British American Tobacco shed 3.1 per cent as the stock traded ex-dividend.

In economic news, figures showed German exports posted their biggest drop in a year in January, throwing the economy's main growth engine into reverse and leaving it on a weak footing at the start of 2010.

British Prime Minister Gordon Brown said in a speech at Thomson Reuters in Canary Wharf that the UK economy was growing but the recovery was still in its early stages and remained fragile.

Data released by the National Institute for Economic and Social Research (NIESR) showed that Britain's economy grew by 0.3 per cent in the three months to February and has expanded by 0.7 per cent since last September's trough.

Across the Atlantic, US wholesale inventories fell modestly in January, while sales rose to their highest level since October 2008, suggesting that inventories would continue to support economic growth in the first quarter.

- Reuters