Banks lead European shares higher as oils slip

European shares closed higher yesterday for the third consecutive session after investors decided US monthly payroll data was not as bad as first feared, with banking stocks the major gainers.

The FTSEurofirst 300 index of top European shares closed up 0.2 per cent at 992.53 points in a choppy session, having earlier been up as much as 995.78 points and down as low as 979.69 points.

The benchmark index has gained 1.7 per cent for the week and is up around 54 per cent since reaching a lifetime low in March.

Across Europe, the FTSE 100 index was up 0.3 per cent, Germany's DAX was 0.1 per cent higher and France's CAC 40 was down 0.04 per cent.

The FTSEurofirst 300 index fell earlier after US employers cut a deeper-than-expected 190,000 jobs in October, driving the unemployment rate to 10.2 per cent, the highest in 26 and a half years.

However, some of the sting was taken out of the report, after job losses for August and September were revised to show 91,000 fewer jobs were lost than previously reported, hinting at some improvement in labour market conditions.

"After some initial confusion about the jobless numbers, the market returned to an upward track with August and September payroll numbers being revised up," said Howard Wheeldon, strategist at BGC Partners.

Banks added the most points to the index. Part-nationalised Royal Bank of Scotland gained 5.3 per cent, after it said it more than halved third-quarter losses as impairments fell.

HSBC, BNP Paribas, Credit Suisse and Barclays were up 1.3 to 3.3 per cent.

Miners featured among the biggest gainers rebounding from earlier falls.

Anglo American, Antofagasta, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata were 0.8 to two per cent higher.

Carmakers were in demand. Daimler gained 1.7 per cent after it said sales at its Mercedes-Benz brand rose seven per cent in August.

British Airways surged 6.7 per cent after the airline posted a better-than-expected pre-tax loss of £292 million in the first-half.

Energy stocks took the most points off the index as crude fell three per cent. BG Group, BP, Royal Dutch Shell and Total were down 0.3 to 1.6 per cent.

Food producers were out of favour. Nestlé fell 1.2 per cent after French cosmetic company L'Oreal, in which Nestlé holds a stake of around 30 per cent, said it sees no pick-up in global consumer demand.

L'Oreal was down 1.7 per cent.

"Nestlé is suffering a bit because L'Oreal gave a cautious outlook for the fourth quarter," a trader said.