* FTSEurofirst 300 up 0.9 pct, Euro STOXX 50 up 1.3 pct
* Investors bet on eastern Ukraine ceasefire after Russia
* ECB stimulus bets further support market
* Hermes falls on LVMH deal
* Hugo Boss drops after share placement
By Francesco Canepa
LONDON, Sept 3 European shares rose on
Wednesday, with a key index hitting a two-month high, on
speculation about a possible ceasefire in eastern Ukraine and
fresh monetary stimulus from the European Central Bank.
The Kremlin said on Wednesday President Vladimir Putin and
Ukrainian leader Petro Poroshenko had agreed on steps towards
peace in eastern Ukraine, even though a ceasefire had not been
agreed between Moscow and Kiev because Russia is not a party to
Trading was nervy, however, as authorities seemed to send
mixed messages, with Poroshenko's press office earlier saying
both presidents had agreed on a "permanent ceasefire".
At 1021 GMT, the FTSEurofirst 300 index of top
European shares was up 0.9 percent at 1,388.04 points, having
earlier hit its highest level since July 7 at 1,391.56 points.
The euro zone blue-chip Euro STOXX 50 was up 1.3
percent at 3,221.40 points.
Shares in Russia-exposed companies were among top gainers.
Austrian lender Raiffeisen Bank International,
which relies heavily on Russia for profits, and Danish brewer
Carlsberg, which has a large exposure to the country
through its Baltika brand, rose 5.4 percent and 3.2 percent,
Sentiment on the broader market was also underpinned by
speculation that the ECB, due to hold a policy meeting tomorrow,
might be compelled to launch an asset-purchase programme, or
quantitative easing (QE), to shore up inflation in the euro zone
after a further batch of weak economic data.
Markit's Composite Purchasing Managers' Index showed euro
zone business grew at the slowest rate this year in August as
escalating tension between Russia and Ukraine subdued spending
"(It's the) extension of the (ECB) trade, massaged by
further weak PMI numbers and the intensity of the QE call, and
even more so the (potential) Putin-organised ceasefire in
Ukraine," Andy Ash, head of sales at Monument Securities, said.
Dovish comments by ECB President Mario Draghi in late August
sparked market bets on upcoming stimulus. However, ECB sources
told Reuters last week that new action this Thursday was
unlikely but not impossible, and that the barrier to QE was
still "very high".
"We're expecting a strong verbal commitment from Draghi on
Thursday," said Romain Boscher, global head of equities
management at Amundi, which has 821 billion euros ($1.08
trillion) under management.
"The ECB still has plenty of ammunition left, and it will
certainly use it when needed. The prospect of further action
from the central bank remains very supportive for risky assets
such as equities."
Bucking the trend was French luxury handbag maker Hermes
, which tumbled 5.7 percent in huge volumes after it
struck a deal with bigger rival LVMH that resolves
their dispute over LVMH's 23.2 percent stake in the maker of
Birkin and Kelly handbags.
German retailer Hugo Boss dropped by 5.2 percent
after an investment company controlled by private equity
investor Permira placed an 11 percent stake of the
company's total capital.
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