Europe shares up 2 percent by midday; banks, oils lead
LONDON (Reuters) - European shares rose 2 percent by mid-session on Tuesday, looking set for a sixth straight day of gains as banks and oil shares advanced and investors bet on likely rate cuts in Europe later this week
At 6:45 a.m. EST the FTSEurofirst 300 .FTEU3 index of top European shares was 2 percent higher at 952.44 points.
The FTSEurofirst 300 has lost nearly 40 percent this year in a global equities slump, sparked by a credit crisis that has shaken the world's top banks and brought a slowing global economy onto the brink of recession.
Investors fretting over the future of the U.S. economy had their attention firmly fixed on the U.S. presidential election.
Democrat Barack Obama leads Republican John McCain in five out of eight key battleground states, according to a series of Reuters/Zogby polls released on Tuesday.
Across Europe, Britain's FTSE 100 .FTSE rose 1.8 percent, Germany's DAX .GDAXI gained 2 percent and France's CAC .FCHI rose 2.3 percent.
"The odds are slightly better for higher indices by the end of the year," said Bernd Meyer, head of pan-European equity strategy at Deutsche Bank in London.
"We now have a more favorable seasonality. Typically, the market is relatively weak in September and October, but the period of November to January tends to be a positive period."
Banks were the biggest gainers. BBVA (BBVA.MC) rose 5.7 percent and Societe Generale (SOGN.PA) jumped 8.2 percent. SocGen's chief executive told French newspaper Les Echos that it could issue another 1.7 billion euro ($2.17 billion) hybrid bond next year.
But Royal Bank of Scotland (RBS.L) slid 5.8 percent after it reported a smaller-than-expected writedown on toxic assets in the third quarter but said it faced more writedowns this quarter and bad debts are rising sharply.
UBS AG (UBSN.VX) was 0.4 percent lower after it said a government bailout is helping to stem client money outflows but warned that it could take a 6 billion Swiss franc ($5.20 billion) hit in the fourth quarter due to accounting effects.
RATES EYED
Australia joined several other central banks on Tuesday by cutting its benchmark cash rate by 75 basis points.
The focus now shifts to the European Central Bank and the Bank of England, which are widely expected to serve up 50-basis point cuts on Thursday.
"We see it happening all around the globe. We had the U.S., Japan and now Australia, and we will have cuts in (the UK) and the euro zone," Meyer added. Continued...
