European shares rise, boosted by US confidence data

European shares closed higher yesterday after data showed US consumer confidence at its highest level in eight months, outweighing investor worries about a North Korean missile launch. The FTSEurofirst 300 index of top European shares rose 0.9 per cent to close at 865.14 points, having been as low as 842.26 earlier.

US consumer confidence rose in May to its highest level in eight months as severe strains in the labour market showed some signs of easing, though Americans' mood remained depressed by historical standards.

The Conference Board, an industry group, said its index of consumer attitudes jumped to 54.9 in May from a revised 40.8 in April, the biggest one-month jump since April 2003. Economists had been looking for a smaller rise, to 42.0.

Oil companies gained, after the price of crude pared losses, and was trading around $61.52 a barrel.

Total, ENI, BP, Royal Dutch Shell and were up between 0.9 and 3.3 per cent.

Wall Street was higher when European bourses were closing for the day, with the Dow Jones Industrials, S&P 500 and Nasdaq Composite indexes up by between 2.1 and 3 per cent.

"The US isn't looking that panicked by the North Korean missile launches that followed the underground atomic tests over the weekend, instead finding strength off numbers such as the better than expected consumer confidence reading," said Jimmy Yates, head of equities at CMC Markets.

Both the US and the UK were closed last Monday for a holiday.

The pan-European index is up more than 34 per cent from the lifetime low it hit on March 9, on growing optimism of economic recovery.

The index is on track for a third successive month of gains, the first time in two years that it has had such a long winning streak.

Earlier on yesterday share prices had been lower, on increased political risk. North Korea, defiant in the face of international condemnation of its latest nuclear test, fired two short-range missiles off its east coast on yesterday and accused the United States of plotting against its government.

Banks, like the wider market reversed earlier losses. BNP Paribas, Deutsche Bank and Société Générale closed between 2.2 and 4.1 per cent higher. German cement maker HeidelbergCement fell five per cent as traders pointed to market talk that Commerzbank may place shares in the company, but the company said it was not aware of any share placement.

Shares in Danone fell 5.1 per cent after the French food group unveiled plans to raise about €3 billion ($4.2 billion) by selling shares to existing shareholders to cut debt and fund bolt-on acquisitions.

Across Europe Britain's FTSE, Germany's DAX and France's CAC were up between 1.1 and 1.4 per cent.

European economic data was not as encouraging as that of the US.

Data showed a record slump in exports and investment caused the German economy's biggest contraction since reunification in the first quarter. Eurozone industrial new orders also plunged last March.

British oil Services Company Wood Group closed 5.9 per cent higher on rumours of a bid by rival AMEC, which rose 3.2 per cent. Wood Group said it was not planning any announcement.