European shares rise to 2-month high, Arcelor soars

LONDON, July 3 Tue Jul 3, 2012 11:37am EDT

LONDON, July 3 (Reuters) - European shares provisionally closed at a two-month high on Tuesday, led by gains in commodity stocks such as ArcelorMittal, as expectations that policymakers may take further steps to tackle the region's debt crisis supported equities.

The FTSEurofirst 300 index rose around 1 percent to 1,045.27 points, which would be its highest closing level since ending at 1,048.07 points on May 1.

The Euro STOXX 50 rose 1.1 percent, continuing a rally from last Friday when European Union leaders took new steps to tackle the sovereign debt crisis and allowed the euro zone bailout fund to inject cash into struggling banks.

"The fact that the banks could be recapitalised directly has given the markets the direction they were looking for," said Securequity sales trader Jawaid Afsar.

"But I suspect that the upside from here is limited to another 100 points. We have to be careful, there are still fundamental problems out there and we would look to take a quick exit on any signs of weakness," he added.

Steelmaker ArcelorMittal gained 5.5 percent, boosted by an upgrade from broker Kepler which raised its recommendation on the stock to "hold" from "reduce."

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