* FTSEurofirst 300 up 1 pct, hits highest level since 2008
* Broad-based rally as ECB unveils new stimulus
* Banks lead gains, seen benefitting from ABS purchases
By Francesco Canepa
LONDON, Sept 4 European shares rose on Thursday,
with a key benchmark briefly hitting a 6-1/2 year high, as the
European Central Bank further cut interest rates and unveiled
plans to buy assets in a bid to shore up inflation in the euro
The ECB unexpectedly cut interest rates to new record lows
and the bank's president Mario Draghi said it would start buying
securitised loans and covered bonds next month to help unblock
lending in the euro zone.
Yields on euro zone sovereign bonds fell, further boosting
the attractiveness of stocks in a low-return environment. The
FTSEurofirst offers a 3.3 percent yield, compared to 2.4 percent
on Italy's 10-year bond.
At 1352 GMT, the FTSEurofirst 300 index of top
European shares was up 1 percent at 1,399.43 points, having hit
its highest level since early 2008 at 1,402.79 points.
The index has risen nearly 8 percent since mid-August as
investors anticipated the ECB's move, leading some traders to
cash in on their bullish stock bets after the announcement.
"Even if Draghi delivered and certainly didn't disappoint,
quite a bit of the news had already been priced in," said Markus
Huber, a senior trader at Peregrine & Black.
"Even if these measures would turn out not to be as
effective as the ECB is hoping that doesn't mean that stocks in
the mid-to long-term won't go up as once again the market is
flooded with liquidity and there are very few alternatives to
Trading volume was high at nearly 80 percent of the
FTSEurofirst full-day average for the past three months.
The broad-based rally saw all sectoral indexes in the STOXX
Europe 600 trade in positive territory, led by euro
zone banks, which are set to benefit from selling
asset-backed securities to the ECB.
"This will be quite positive for European banks as a whole,
allowing them to free up capital from loans and to lend to the
real economy," Carlos Peixoto, an analyst at BPI in Porto, said.
Elsewhere, Standard Life surged 6.1 percent after the
financial services group agreed to sell its Canadian operations
for about $3.7 billion to Manulife Financial.
German industrial services and construction group Bilfinger
tumbled 9.8 percent after it slashed its 2014 profit
forecasts late on Wednesday.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Reporting By Francesco Canepa; Editing by Toby Chopra)