European shares close higher and rise for straight fifth week

European shares closed higher on Thursday, buoyed by positive corporate and economic news from the United States, including an upbeat statement from Wells Fargo, which lifted banks.

The FTSEurofirst 300 index of top European shares rose 2.1 per cent to 778.39 points. The index rose 0.9 per cent over the week, which was shortened by the Good Friday holiday, for its fifth straight weekly gain.

It was "a wonderful set of results from Wells Fargo, and less horrific jobless figures," said David Buik, senior partner, at BGC Partners. But he added: "The market had left itself horribly exposed long. (Traders) were looking to hang their hat on a piece of good news."

The index is up 20.6 per cent from its lifetime low of March 9 but is still down 6.4 per cent this year after plunging 45 per cent in 2008, hammered by a banking crisis and several major economies going into recession.

Wells Fargo & Co, the fourth-biggest US bank, soared more than 30 per cent in early trade after the company forecast first-quarter net income of about $3 billion. It also said its acquisition of Wachovia was going better than expected.

The number of US workers filing new claims for jobless benefits fell more than expected last week, although so-called continued claims scaled another record high in late March, government data showed.

Across Europe, the FTSE 100 index closed 1.5 per cent higher; Germany's DAX and France's CAC 40 were up 3.1 and 1.8 per cent respectively.

Mining shares also advanced as copper jumped 3.8 per cent.

BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources rose between 3.8 and 10.7 per cent.

However, banks were the biggest gainers.

Barclays closed 12.5 per cent higher after it said it was selling its iShares asset management business to private equity firm CVC Capital Partners for £3 billion ($4.4 billion) in a deal that will be 70 per cent funded by the British bank., Deutsche Bank, HSBC, Lloyds, and UBS, up between 4.6 and 10.9 per cent.

Hypo Real Estate jumped 15 per cent after the German government offered to take over the stricken bank, the country's highest profile casualty of the financial crisis.

German financials were boosted by reports the government is mulling the creation of a bad bank to take hundreds of billions of euros of problem loans under the wing of the state.

ING Group jumped 17.8 per cent after the Dutch financial services group said it planned to divest operations worth up to €8 billion to reduce risk and will focus its banking activities on Europe.

Indian-focused mining group Vedanta finished 13 per cent higher. It posted higher fourth-quarter output of its two most profitable products, zinc and iron ore, but shut down some aluminium and copper operations to cut costs.

Solvay soared 13.2 per cent after Reuters reported that the Belgian chemicals and drug maker planned to start a formal auction of its pharmaceutical business after the weekend Easter break. Other chemicals companies to rise included BASF, up 6.5 per cent.