Commodities help FTSEurofirst 300 finish over 1,100

European stocks hit an 18-month closing high for a second straight session yesterday, boosted by commodity shares, which advanced on expectations of improving demand outlook for metals and oils following recent robust data.

However, the gains in equities were capped as a number of newspaper reports cast doubt on Greece's ability to emerge from its fiscal crisis. The FTSEurofirst 300 index of top European shares ended 0.7 per cent higher at 1,101.43 points, the highest close since September 2008. It has jumped 70 per cent from a record low in March last year.

Miners tracked higher copper prices, which hit a 20-month high, as robust US jobs, services sector and housing data in past days has lifted the demand outlook for base metals. Gold rose to record highs in euro terms on fears over the health of peripheral eurozone economies.

BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources rose 1.4 to 3.4 per cent. "Encouraging US economic numbers helped the market but other issues like Greece are putting a lot of weight on the market," said Koen De Leus, economist at KBC Securities.

"The Greek situation is not yet solved. People are quite correct to think that it is far from over. The credit default swaps have also risen and that's a very clear signal that investors really don't trust."

Greek banks fell 4.1 per cent, with a flurry of news suggesting Athens' debt crisis was worsening. A top Greek finance ministry official later said the country was not seeking to amend a European Union-International Monetary Fund safety net agreement, trying to calm markets that ditched Greek assets and the euro. However, investors remained cautious.

The premium investors demand to hold 10-year Greek government bonds rather than eurozone benchmark German Bunds rose to a euro record high of 408 basis points.

Across Europe, Germany's DAX was up 0.3 per cent, while France's CAC 40 rose 0.5 per cent. Britain's FTSE 100 index rose 0.6 per cent. Prime Minister Gordon Brown launched a month-long election campaign likely to be dominated by the economy. It is shaping up as the most unpredictable contest since 1992.