Autos power acceleration in European shares

Traders work at their desks in front of the DAX board at the Frankfurt stock exchange November 2, 2011.

LONDON (Reuters) - European shares hit a one-week closing high on Tuesday as encouraging comments from some leading U.S. companies and hopes for more policy easing in China gave cyclical stocks a boost, with autos and miners among the top sectoral gainers.

General Motors (GM.N) and Ford (F.N) executives gave positive market outlooks, while Alcoa's (AA.N) results overnight, in which it gave a positive outlook for aluminum demand, also improved sentiment.

While Chinese copper imports grew, helping to buoy miners, figures showing China's exports and imports rose in December at their slowest pace in more than two years increased hopes for more monetary policy easing from Beijing.

"Chinese imports are slowing, and that indicates the country might start stimulating its economy and create some more liquidity for the entire world," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

"People are putting cash into equities and the upward move could prolong a little bit, as no one wants to miss the rally. But we need some confirmation to see that things are indeed improving. It's too early to call the bottom of the market."

Sectors linked to global growth rose, with the STOXX Europe 600 Automobile index .SXAP up 3.7 percent while the Basic Resources index .SXPP, which fell 30 percent in 2011, increased 3.4 percent.

The FTSEurofirst 300 .FTEU3 index of top European shares finished 1.8 percent stronger at 1,027.23 points, the highest close since January 3. The euro zone's blue-chip Euro STOXX 50 .STOXX50E index rose 2.7 percent to 2,347.47 points.

Charts showed Tuesday's price action had improved outlook for the Euro STOXX 50, which bounced back after falling in the previous four sessions.

Philippe Delabarre, technical analyst at Trading Central, said the index was supported by an ascending trend line and the 50 percent Fibonacci retracement at 2,285, calculated between the December bottom and 2012's top.

"Furthermore, the relative strength index is above its neutrality area. A bullish continuation pattern in ascending triangle is taking shape, and would be confirmed by a push above 2,395 points."

Dmytro Bondar, technical analyst at RBS, said the price action had broken the triangle formation and there was a high likelihood of recovery towards the next resistance levels at 2,400 and 2,506 -- Fibonacci projections from October-November moves.

"The slow stochastic indicator with standard parameters is heading towards an overbought territory but is still bullish, pointing to a possibility of a near-term correction from either of the levels, but overall technically positive outlook in the next few weeks," he said.

BANKS RECOVER

Banking shares rebounded after falling in the previous four sessions. The STOXX Europe 600 banking index .SX7P, which fell 32 percent last year to be the worst sectoral performer, gained 3.6 percent, helped by comments from credit rating agency Fitch.

The agency does not expect to cut France's triple-A credit rating this year, while countries under review such as Italy or Spain could be downgraded by one or two notches, Ed Parker, Fitch's head of EMEA sovereign ratings, said.

"While cynics might point out Fitch is French-owned, and so probably doesn't dare take a scalpel to France's AAA, it did help energize the banking sector," said Chris Beauchamp, analyst at IG Index.

Italy's UniCredit (CRDI.MI) rose 6 percent, bouncing from recent weakness after a massively discounted rights issue, while France's BNP Paribas (BNPP.PA) added 6.1 percent.

Fund managers said investors should be selective when picking companies to invest in because the rally might fade, as there is no significant progress in resolving the euro zone debt crisis that has hung over markets for more than two years.

"Investors should focus on companies with strong market positions, good business models, strong balance sheets and plenty of cash flow generation. We like some companies in the pharma sector that still have very large net cash positions," said Felicity Smith, fund manager at Bedlam Asset Management.

Credit Suisse said it had screened for stocks with superior cash generation ability, strong balance sheets and attractive yields for its High and Sustainable Dividend Yield Basket that included Aegis (AEGS.L), AstraZeneca (AZN.L), BAE Systems (BAES.L), Thomas Cook (TCG.L) and WPP (WPP.L).

Philips Electronics (PHG.AS) fell 4.7 percent after warning of soft fourth-quarter profits.

(Editing by David Hulmes)