* FTSEurofirst 300 up 0.6 pct
* China investment promise boosts basic resources
* Volatility drops heading as month-end nears
* Insurers suffer from probe threat
By Alistair Smout
LONDON, March 28 European shares rose in early
deals on Friday and looked set to post gains for a second
straight week after basic resources stocks received a boost from
plans by China to boost investment.
The pan-European FTSEurofirst 300 was up 0.6
percent at 1,330.76 at 0904 GMT, 1.8 percent higher on the week.
The rise took gains over the last fortnight to 3.6 percent,
but the index is still down 1.6 percent from a 5-1/2 year high
hit in February.
Concerns about the geopolitical situation in Ukraine,
slowing Chinese growth and the prospect that U.S. interest rates
might rise sooner than expected have seen the index fall 1.3
percent in March.
However, recent weakness in China prompted Chinese Premier
Li Keqiang to say that Beijing was ready to support the cooling
economy and would push ahead with infrastructure investment.
That helped the STOXX Europe 600 Basic Resources Index
climb 1.7 percent, making it the top sectoral riser in
"We're making a little bit of a jolt higher, based on hopes
of some form of Chinese fiscal stimulus, but that's not the big
game in town. The big question for China is whether it can
deflate its credit bubble without creating a burst," said Jeremy
Batstone-Carr, analyst at Charles Stanley.
"The bounce we're seeing today is a short-term effect."
Volatility on the Euro STOXX 50, a crude gauge of
investor fear, has dropped by a quarter over the last weeks,
indicating that investors are becoming more relaxed about the
issues that have hit stock returns so far this month.
Much of the volatility has been caused by Russia's
annexation of Crimea from Ukraine, which has hit stocks exposed
to the Russian economy and potentially detrimental sanctions.
Austrian bank Raiffeisen, which derives over 20
percent of its revenues from Russia, nevertheless rose 3 percent
Insurers was the only sector in negative territory
with Aviva, Legal & General, Standard Life
and Prudential all down between 2 and 7 percent.
Traders pointed to reports saying a UK regulator is to
investigate about 30 million insurance company policies over
concerns that customers are subject to "unfair" conditions.
"The falls in insurers are largely to do with this story
about the government probing into issues going back decades.
It's the element of the unknown, because if you're going back
that far, you've absolutely no idea what that's going to
encompass," CMC Markets senior sales trader Toby Morris said,
comparing the situation to recent probes into banks.
"Anything that's muddy waters at the moment is not exactly
flavour of the month."
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Catherine Evans)