European shares end higher; banks, miners advance

European shares closed higher yesterday, led by financials, after the biggest-ever liquidity injection by the European Central Bank boosted hopes that the effort could help pull the eurozone economy out of a recession.

The FTSEurofirst 300 index of top shares ended 2.4 per cent higher at 853.56 points, recovering from two straight sessions of losses. The index, which slumped 45 per cent in 2008, has jumped 32 per cent since hitting a record low last March.

The ECB lent banks €442.241 billion of one-year money at a fixed one per cent rate, higher than the €300 billion forecasted by analysts in a Reuters poll.

Banking stocks were among top gainers, with Barclays, BNP Paribas, Deutsche Bank, HSBC, Lloyds, Société Générale and UBS climbing between 1.1 and 6.6 per cent.

Miners were also higher, tracking gains in metals prices. Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources, Rio Tinto and Xstrata gained 3.3 to 10.1 per cent.

Philippe Gijsels, senior equity strategist at Fortis Bank in Brussels, said the ECB's move was welcomed as it showed the central bank was ready to follow the US Federal Reserve and the Bank of England in using non-conventional ways to stimulate the economy.

"The market probably sees it as a small step in the right direction. It is a bit of a change in attitude and maybe the market is expecting that this is not the final thing. This is only the first step towards more EU quantitative easing," Mr Gijsels said.

Energy majors were also in favour, as oil prices steadied around $69 a barrel. BG Group, BP, Total and StatoilHydro advanced between 0.3 and 1.8 per cent, but Royal Dutch Shell edged down 0.3 per cent.

Across Europe the FTSE 100 index was up 1.2 per cent, Germany's DAX climbed 2.7 per cent and France's CAC 40 was 2.2 per cent higher.