Spain lifts European shares towards 8th straight weekly gain

Fri Jun 6, 2014 4:23am EDT

* FTSEurofirst 300 up 0.1 pct

* Spanish shares rise again following ECB, banks in demand

* But Monte Paschi, BNP weigh on national indexes

* Non-farm payrolls due 1230 GMT, wide range of estimates

By Alistair Smout

EDINBURGH, June 6 (Reuters) - Spanish blue chips led European shares towards their eighth straight week of gains on Friday, a day after the European Central Bank eased monetary policy on several fronts, though trade was cautious ahead of U.S. jobs data.

Banks in states on the euro zone periphery were in demand, helping boost Spanish shares by 0.4 percent. Italian shares gave away early gains, however, after Banca Monte Paschi priced a cash call at a discount.

Hopes that the ECB would act have fuelled European stocks on their winning run - the longest on the FTSEurofirst 300 since an 11-week streak in mid-2012 that was supported by ECB President Mario Draghi's pledge to do "whatever it takes" to save the euro.

The FTSEurofirst 300 edged up by 0.1 percent on Friday, with banks up 0.8 percent.

Draghi stopped short of announcing a "money printing" quantitative easing programme on Thursday, but the string of measures he did outline to fight low inflation and boost the bloc's economy were seen as supportive.

"The one thing that was missing was bond purchases, but that's a last resort. For the banking sector in Europe, though, this is an encouraging statement and perhaps even slightly ahead of expectations," Veronika Pechlaner, who helps manage $13 billion of assets at Ashburton Investments, said.

"We've had a bit of a rally and a strong recovery over the last couple of months. So after the announcement yesterday, you're probably happy to stay long in banks, and have positions that will benefit from low funding costs, but you wouldn't add to longs here necessarily."

Individual lenders weighed on the sector, however.

As well as Monte Paschi, BNP Paribas fell 1.1 percent, dragging France's CAC index into negative territory after Reuters reported that U.S. regulators had looked at a $16 billion fine for the bank for breaking trade sanctions.

Moves were subdued ahead of the U.S. nonfarm payrolls report due at 1230 GMT, which considered more uncertain than usual and likely to provide direction for markets.

The median forecast is for a solid gain of 218,000, but estimates range from as little as 110,000 to as high as 325,000.

The median would be a deceleration from April's outsized 288,000-job gain, when hiring was bouncing back from a winter lull.

"As far as the employment data (is concerned), we think the market to some extent will look for a move higher on the back of this data which we think will surprise to the upside," Atif Latif, director of trading at Guardian Stockbrokers, said.

"The cyclical recovery remains on track."

Europe bourses in 2014: link.reuters.com/pap87v

Asset performance in 2014: link.reuters.com/gap87v

Today's European research round-up

(Editing by John Stonestreet)