European shares boosted by new Italian government

LONDON, April 29 Mon Apr 29, 2013 3:12am EDT

LONDON, April 29 (Reuters) - European shares rose on Monday, building on last week's steep advance after an Italian coalition government was named, halting two months of political uncertainty that has taken its toll on equities.

The FTSEurofirst 300 was up 0.4 percent at 1,201.62 by 0710 GMT, having jumped 3.7 percent last week fuelled by expectations for an interest rate cut by the European Central Bank after weak macro data including falling German business confidence.

Italy's FTSE MIB, meanwhile, added 1.3 percent after Italian centre-left politician Enrico Letta was sworn in as Italy's new prime minister over the weekend.

"It's a positive development.. (but) I'm not constructive on European equities," Michael Hewson, analyst at CMC Markets, said, citing a weak European economic outlook.

"They're still well below the highs... and to be quite honest, while you could argue that Italy's got some scope to go up, that's only because it's been sold off."

Italian shares have been underperforming this year, with the MIB up 1.8 percent year-to-date, while the FTSEurofirst300 is up 5.5 percent, as February's inconclusive election revived worries over the pace of economic reforms for the debt-stricken country.

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