European shares close higher, led by banks

LONDON, July 14 (Reuters) - European shares rose for a second day on Tuesday, with banks boosted by hopes that better-than-expected results at Goldman Sachs (GS.N) are heralding a strong reporting season for the sector.

The FTSEurofirst 300 .FTEU3 index of top European shares rose 1 percent to a provisional close of 838.61 points, after surging 2 percent in the previous session.

Banks added most to the index. BNP Paribas (BNPP.PA), Deutsche Bank (DBKGn.DE), HSBC (HSBA.L), Societe Generale (SOGN.PA), UBS (UBSN.VX) and UniCredit (CRDI.MI) rose between 1.7 and 3.6 percent.

"The economy is getting close to a turning point," said Darren Winder, head of macro and strategy research at Cazenove, in London. "Profits are starting to form a bottom, and they should grow in the second half of the year, and further into 2010."

Goldman Sachs (GS.N), Wall Street's largest surviving investment bank, reported a 33 percent rise in quarterly earnings as a strong gain in trading was offset by a one-time charge to repay government loans. [ID:nN14175292]

The European benchmark index is up 29.9 percent from the lifetime low it hit on March 9, but some analysts say the rally has gone too far, relative to any real signs of recovery.

Economic data from the United States was open to different interpretations.

A jump in auto and gasoline sales boosted U.S. retailers in June, while a measure of inflation soared by twice as much as expected, bolstering hopes the economy was finally beginning a modest recovery. [ID:nN14252432]

Commerce Department data showed sales at U.S. retailers rose 0.6 percent from a month earlier, ahead of economists' expectations for a 0.4 percent advance.

But some analysts said the data was weak, once autos and gasoline are excluded.

A separate report from the Labor Department showed producer prices jumped 1.8 percent last month, far outstripping forecasts for a 0.9 percent gain.

Wall Street was slightly higher as European bourses were closing. The Dow Jones .DJI, S&P 500 .SPX and Nasdaq Composite .IXIC were up between 0.1 and 0.3 percent. (Reporting by Brian Gorman)