Buoyant banks propel Europe stocks to 5-mth closing high
* FTSEurofirst 300 up 0.9 pct; hits highest close in 5 mths
* Banks lead gains; sector up 118 pct since early March
* Defensives stocks catching up in cyclical-led rally
* For up-to-the-minute market news, click on [STXNEWS/EU]
PARIS, June 11 (Reuters) - European equities ended at their highest close in five months on Thursday, propelled by buoyant banking stocks, as U.S. macro data showing the recession was abating helped shares extend their sharp three-month rally.
Data showed sales at U.S. retailers rose in May for the first time in three months, and the number of workers filing new applications for jobless benefits fell for a fourth straight week last week. [ID:nN11493029]
The FTSEurofirst 300 .FTEU3 index of top European shares ended 0.9 percent higher at 887.78 points, the index's highest close since Jan 6.
Thursday's rally was led by banking shares, such as HSBC (HSBA.L), UBS (UBSN.VX), Barclays (BARC.L) and BNP Paribas (BNPP.PA), up 2.2-5.6 percent.
But sectors seen as defensive such as utilities, pharma and telecoms -- shunned by investors during most of the spring rally -- were also on the rise, with Vodafone (VOD.L) up 2.5 percent, Roche (ROG.VX) up 1.9 percent and E.ON (EONGn.DE) up 1.3 percent.
"Cyclical stocks are now priced at valuation levels that we usually see at mid-cycle. That's premature because the economic activity is still in bad shape," said Chicuong Dang, equity analyst at KBL Richelieu, in Paris.
"Meanwhile, valuation multiples in sectors such as telecoms and utilities are still very attractive."
Around Europe, UK's FTSE 100 index .FTSE gained 0.6 percent, Germany's DAX index .GDAXI rose 1.1 percent, and France's CAC 40 .FCHI added 0.6 percent.
Auto stocks gained ground, with Daimler (DAIGn.DE) up 2.7 percent and BMW (BMWG.DE) up 1.2 percent. French car parts maker Valeo (VLOF.PA), upgraded to "buy" by Merrill Lynch, surged 8.5 percent.
Among the few stocks on the downside, Carrefour (CARR.PA) lost 3.7 percent, dragged lower by market talk that the retailer could lower its profit outlook, according to traders. Carrefour declined to comment. Continued...
