* FTSEurofirst 300 gains 0.5 pct, hits 3-week high
* Euro zone's Euro STOXX 50 index sets 5-1/2-year peak
* Focus on euro zone inflation data at 0900 GMT
* Miners top sectoral gainers, Italian banks rally
By Atul Prakash
LONDON, March 31 European equities rose for a
fifth straight session to a three-week high on Monday on growing
speculation that the European Central Bank could ease its policy
and China might take steps to stimulate its economy.
At 0738 GMT, the FTSEurofirst 300 index was up 0.5
percent at 1,339.42 points after touching 1,340.73, the highest
since early March. The euro zone's blue-chip Euro STOXX 50
rose 0.3 percent to a 5-1/2-year high of 3,185.67.
Italian banks rallied after the head of Italy's banking
association said they will not require any state funds as a
result of the ECB's stress tests this year.
Investors awaited the euro zone inflation data, due at 0900
GMT. A surprise fall in inflation for Spain and Germany on
Friday raised pressure on the European Central Bank (ECB) to
take additional measures at a policy meeting on Thursday to ward
off the threat of deflation.
Annual inflation in the euro zone has been in what ECB
President Mario Draghi has called the "danger zone" below 1
percent for five months.
"The mood remains positive on equity markets as commodity
prices are rising again and geopolitical tensions take a back
seat. This is a good foundation to start a new week and the
chance for new yearly highs this week," Christian Stocker,
strategist at UniCredit in Munich, said.
"The second half of the week is more interesting as we have
a monthly policy meeting of the ECB and the U.S. labor market
report. The euro zone's inflation is expected to fall again and
this could fuel expectations that the ECB will decide on some
kind of quantitative easing later."
Among major sectoral movers, miners topped the gainers'
list, with the STOXX Europe 600 Basic Resources index
rising 1.3 percent on speculation of fresh stimulus measures in
China, the world's biggest metals consumer.
Chinese Premier Li Keqiang sought to reassure markets that
Beijing was ready to support the cooling economy, saying the
government had the necessary policies in place and would push
ahead with infrastructure investment.
Italian banks led financial stocks higher on news that they
will not require any state funds. Shares in Monte dei Paschi di
Siena, Intesa Sanpaolo and UniCredit
rose 0.8 to 3.6 percent.
Banco Popolare gained 3.5 percent, the first day
of a 1.5 billion euro ($2.06 billion) capital increase which
according to the Italian press has attracted interest from
Analysts said the market's outlook remained positive and key
indexes, such as the Euro STOXX 50, could set new highs in the
medium term. The blue-chip index's 5-1/2-year high on Monday is
about 7 percent higher since a low hit in mid-March.
"The buying pressure is intensifying, and the momentum is
strongly bullish," Aurel BGC chartist Gerard Sagnier said,
adding the index's next target would be to reach 3,400 points.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Blaise Robinson in Paris. Editing by