European shares post biggest gain

European stocks notched up their biggest one-day gain in four and a half months yesterday, with banks rebounding as recent worries about Dubai's debt receded, and macroeconomic data further boosting sentiment.

The FTSEurofirst 300 index of top European shares closed up 2.6 per cent at 1,011.06 points, the biggest one-day percentage gain since July 15.

Banks added most points to the index, having been hit in recent days by worries over exposure to Dubai.

Banco Santander, Credit Suisse, Deutsche Bank, HSBC, Standard Chartered and UBS rose between 1.9 and 5.2 per cent.

Greek banks, hit hard last week on worries over funding, registered more spectacular gains. EFG Eurobank, National Bank of Greece and Bank of Piraeus added 9.6 to 13.3 per cent.

Across Europe, Britain's FTSE 100 ended the day 2.3 per cent higher; Germany's DAX and France's CAC-40 rose 2.7 and 2.6 per cent respectively.

"It looks like (Dubai's debt) was a storm in a teacup," said Mike Lenhoff, chief strategist and head of research at Brewin Dolphin Securities, in London.

"But it's a reminder that you have these timebombs ticking away. They'll go off from time to time, though this one has not had a major impact."

Mr Lenhoff added: "I have been impressed by the resilience of the markets and I think they may go sideways for a while, or they could see some profit-taking if central banks decide to raise interest rates."

Efforts by Dubai World to restructure about $26 billion in debt out of the estimated $59 billion it owes reassured investors that the emirate's debt problems can be contained.

Dubai World, the government-controlled conglomerate that led the transformation of Dubai into a regional hub for finance, investment and tourism, unveiled details of a restructuring plan late on Monday that would cover debt owed by its main property firms, Nakheel and Limitless.

The European benchmark is up more than 56 per cent from its lifetime low of March 9, as investors have seen several economies emerge from recession. Data yesterday showed that Switzerland became the latest to do so, growing at 0.3 per cent in the third quarter.

German unemployment fell for a fifth straight month.

Oil shares gained as Brent crude futures rose towards $80 a barrel, helped by a weaker dollar, trading at about $1.51 to the euro.

BP, Royal Dutch Shell, BG Group, Repsol, Total and StatoilHydro added 2.1 to 2.5 per cent.

Miners gained as spot gold hit a record high of more than $1,200 an ounce and copper rose to a 14-month high .

BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Fresnillo, Lonmin and Xstrata rose between 3.3 and 7.5 per cent.

Eurasian Natural Resources rose 4.4 per cent, extending Monday's rise after Bank of America Merrill Lynch added the stock to both its developed and emerging Europe 1 lists.

US macroeconomic data was mostly positive. Pending sales of previously owned US homes rose unexpectedly to their highest level in 3-1/2 years in October, suggesting the housing market recovery was gaining steam.

The US manufacturing sector grew in November for the fourth straight month but at a slower rate than expected.

Wall Street was higher around the time European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were up between 1.2 and 1.4 per cent.

Vivendi rose four per cent. General Electric Co and Vivendi have agreed in principle to a deal in which GE would buy the French company's 20 per cent stake in NBC Universal for $5.8 billion.