European stocks end sharply up

European shares ended sharply higher yesterday, as Washington's move to rescue banking giant Citigroup and the UK government's measures to help the economy boosted sentiment and lifted commodities and banks.

The FTSEurofirst 300 index of top European shares bounced back to finish 8.9 per cent higher at 828.63 points - its second-biggest one-day percentage rise on record. The index lost 11.5 per cent last week to hit a five-and-a-half-year low.

It has fallen 45 per cent this year, hurt by the financial sector crisis and the prospect of a deep recession.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were up between 9.8 per cent and 10.3 per cent.

Banking shares surged after slipping in the previous sessions, with UBS soaring 21.4 per cent, Lloyds TSB jumping 18.4 per cent, HBOS climbing 17.3 per cent and Royal Bank of Scotland adding 7.2 per cent.

Barclays closed 10 per cent higher after its shareholders backed a $10 billion fundraising, but Standard Chartered, which sought new funds too, slipped 4.5 per cent as investors absorbed the weekend rescue of Citigroup.

"The rescue of Citigroup, which provided a huge amount of uncertainty last week, hopes that Barack Obama can put the right team together to deal with the economic turmoil and expectations of a stimulus package from the UK are helping the markets to bounce back," said Barclays Stockbrokers strategist Henk Potts.

"In the short term, equities are still expected to remain volatile. The reality is economic growth is slowing down and corporate profitability is under pressure."

Britain and the United States moved to unveil their newest strategies to battle the global economic crisis even as European fears of a long-lasting recession deepened.

The US agreed to inject $20 billion of new capital to rescue one of the world's top banks and European leaders said they would stand by European industry, especially the automobile sector.