* FTSEurofirst 300, Euro STOXX 50 up 0.1 pct
* Steelmakers boosted by UBS upgrade
By Francesco Canepa
LONDON, Aug 26 Euro zone shares steadied on
Tuesday after their biggest daily rise in narly five months on
the previous day, which had been fuelled by prospects of further
stimulus measures from the European Central Bank (ECB).
Steelmakers ArcelorMittal, Salzgitter
and Voestalpine outperformed broadly flat European
bourses as analysts at UBS upgraded their shares to "buy" from
"sell" in expectation that the trio will benefit from a
turnaround in the sector.
Their stocks rose by between 2.3 percent and 5 percent.
At 1042 GMT the FTSEurofirst 300 index of top
European shares was up 0.1 percent at 1,368.37 points. The UK
market, shut on Monday for a public holiday, gained ground, with
the FTSE 100 index up 0.3 percent.
The euro zone's blue-chip Euro STOXX 50 index
was up 0.1 percent at 3,166.96 points after surging 2.2 percent
on Monday, its biggest rise since early March, boosted by
comments from ECB President Mario Draghi.
"Stocks are taking a breather following yesterday's
acceleration. (But) the mood remains quite positive after
Draghi's comments, which confirmed that the ECB is determined to
fight deflation," Saxo Bank trader Pierre Martin said.
Speaking on Friday at a global central banking conference in
the United States, Draghi said the ECB was prepared to respond
with all its "available" tools should inflation drop further.
The remarks, which have sent the euro to a one-year
low against the dollar, fuelled speculation that the ECB could
embark on a large-scale asset-buying scheme known as
quantitative easing, or QE, to pump cash into the financial
system and revive inflation.
European stocks have surged since mid-2012, with the
FTSEurofirst 300 gaining 45 percent in a rally sparked by
comments from Draghi saying that the ECB would do whatever it
takes to save the euro.
The rally lost steam in June, however, as investors worried
about the impact from the crisis in Ukraine and sanctions
against Russia, and after a batch of strong U.S. macroeconomic
data increased speculation that the U.S. Federal Reserve could
raise interest rates sooner than expected.
Expectations of fresh ECB stimulus also helped the market to
take a French government reshuffle in its stride. Paris's CAC-40
index was up 0.2 percent on Tuesday after rising 2.1
percent the previous day.
France's Prime Minister Manuel Valls was expected to put
together a new pro-reform government on Tuesday, having resigned
the previous day after President Francois Hollande's eviction of
rebel ministers who had opposed budgetary rigour.
"The visibility on what Mr Hollande has been willing to
implement was getting weaker because of divergence within the
government, so he has solved this issue," said François Duhen,
director of dedicated research at CM-CIC Securities in Paris.
"I'd say it's more positive than negative if they manage to
convince enough members of parliament. But if they cannot find a
majority ... then we will head for significant trouble."
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