European shares close higher, led by commodities

European shares closed higher yesterday, snapping a two-day losing streak as a stronger commodity sector tracked firmer crude and metals prices that were supported by a weaker dollar.

The pan-European FTSEurofirst 300 index of top shares closed up 0.5 per cent at 1,004.41 points. The European index has rallied nearly 56 per cent since hitting a low in March and is up around 18 per cent this quarter, on track to post its best quarterly rise in almost a decade.

Across Europe, Britain's FTSE 100 advanced 0.2 per cent, Germany's DAX rose 0.7 per cent and France's CAC 40 put on 0.3 per cent.

"A fairly positive tone to the day. I think it is a general notion that the recession is over and the economy is only going to improve from here," said Peter Dixon, economist at Commerzbank.

US Treasury Secretary Timothy Geithner said the US economy appeared to be gathering steam and G20 leaders meeting in Pittsburgh this week would strive to ensure the recovery was balanced.

"But there is a growing sense we are getting a bit ahead of ourselves. We have had a pause in recent days ... and I expect the trend over the next few days is going to be flat," Mr Dixon said.

Energy stocks added most points to the index as oil rose above $71 a barrel, recovering from a sharp fall the previous day. BP, Royal Dutch Shell and Total were 0.7 to 0.9 per cent higher.

Miners tracked metals prices higher, with copper and nickel up 1.6 and 3.9 per cent, respectively.

Eurasian Natural Resources Corporation, Rio Tinto and Xstrata rose between 1.1 to 4.4 per cent.

Drugmakers, which offer relatively higher and steadier yields, were also in demand.

Roche gained 1.4 per cent after Phase II data showed that Avastin, which has already been shown to help patients with brain cancer stay alive longer without their condition worsening, may also improve their daily lives. Banks found favour, with Credit Suisse gaining nearly three per cent. The Swiss group is confident it can keep private banking margins between 110 to 120 basis points over the long term.