European shares rise; autos, oils, banks gain

European shares rose yesterday, with automakers racing ahead after above-forecast results at Daimler, and with energy companies gaining from stronger crude prices.

The pan-European FTSEurofirst 300 index of top shares rose 1.4 per cent to close at 1,103.46 points after two days of losses. The benchmark is up nearly 71 per cent from its lifetime low of March 9, 2009.

Across Europe, Britain's FTSE 100 index ended the day one per cent higher while Germany's DAX and France's CAC 40 rose 1.7 and 1.4 per cent respectively.

Carmakers were in demand after luxury carmaker Daimler reported strong first-quarter results late on Monday and said its Mercedes Benz division might earn twice as much as it previously forecast.

Daimler soared 7.4 per cent. BMW and Renault rose 4.2 and 4.5 per cent respectively.

Fiat and Peugeot, both due to issue updates today, rose 9.3 and 5.1 per cent respectively.

Fiat will say it is planning to split its automotive arm from the rest of the group in a far-reaching restructuring, a person familiar with its thinking told Reuters. Some analysts continue to caution that the market has risen too far.

"We're finding it harder to find companies where you can see material upside," said Andy Lynch, fund manager at Schroders. "It's surprising that people are happy to keep chasing stocks higher."

Energy stocks gained as some European flights resumed following the volcano turmoil, with Brent crude futures rising to more than $85, as jet fuel demand increased.

BP, Royal Dutch Shell and Total gained between 1.8 and 2.0 per cent.

Banks also boosted the index, regaining some ground lost in the previous two sessions. Goldman Sachs, charged with fraud by the US Securities and Exchange Commission, reported blow-out quarterly earnings.

But Goldman shares fell, as some investors chose to focus on the fraud issue, as Britain's market watchdog launched its own probe.

Deutsche Bank, BNP Paribas, Societe Generale and Banco Santander gained one to 2.2 per cent.

Royal Bank of Scotland gained 4.6 per cent, up for a fifth straight day, and is above the average price the UK government paid for its stake in the credit crisis.

In other banking news, Raiffeisen International Bank surged 10.7 per cent after the emerging Europe lender released details of its re-merger with parent Raiffeisen Zentralbank.

Wall Street was higher around the time European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were up between 0.2 and 0.6 per cent.

On the downside, supermarket giant Tesco fell 1.5 per cent after it met forecasts with a nine per cent rise in full-year profit, but signalled a slowdown in recent sales growth in its main British market.

Among other individual stocks, SABMiller rose 4.5 per cent after the company says organic lager volumes grew two per cent in the fourth quarter.

Rival Carlsberg gained 3.7 per cent and Heineken rose 2.1 per cent ahead of a trading update on Wednesday.

Finnish lift and escalator maker Kone gained 5.9 per cent. The company reported first-quarter earnings ahead of most market expectations thanks to cost cutting and raised its full-year outlook.

In macroeconomics, German analyst and investor sentiment rose by more than expected in April, gaining for the first time since last September.