* FTSEurofirst 300 up 0.5 pct, Euro STOXX 50 up 0.4 pct
* DAX hits fresh record high in early trade
* Banca Monte dei Paschi di Siena jumps after results
* Stocks very attractive relative to bonds -360 AM's Jabes
By Blaise Robinson
PARIS, May 15 European shares hit more
multi-year highs on Wednesday after data showing the euro zone
remains stuck in recession fuelled expectations that central
banks will keep flooding markets with liquidity.
Banking stocks were among the biggest gainers, with Italy's
Banca Monte dei Paschi di Siena jumping 8 percent
after posting a smaller-than-expected quarterly loss and
confirming its intention to pay a coupon on state loans in cash,
sparking hopes of a turnaround for the lender.
Portugal's Banco Espirito Santo rose 3.9 percent
and France's Credit Agricole added 3.7 percent.
At 1035 GMT, the FTSEurofirst 300 index of top
European shares was up 0.5 percent at 1,242.54 points, a level
not seen since mid-2008.
The euro zone's blue chip Euro STOXX 50 index
was up 0.4 percent at 2,806.48 points, a near two-year high,
while Germany's DAX pushed above its recent record high
in early trade, gaining as much as 0.4 percent, before nudging
back to a 0.2 percent rise on the day.
The euro zone economy shrank for the sixth straight quarter
in January-March, data showed on Wednesday, marking the longest
recession on records back to 1995.
The European Central Bank cut interest rates to a record low
earlier this month and stands ready to lower them again, and it
has flooded the market with excess liquidity.
"The market is driven by one thing: the massive liquidity
injected by central banks. With bond yields at such levels,
equities seem to be the only interesting asset class," said
Thierry Jabes, strategist at 360 Asset Managers, which has 180
million euros ($232 million) under management.
"The reaction to the bad German GDP data is paradoxical. It
shows convergence with other euro zone economies, which should
help soften Germany's policy stance and create a consensus for
further interest rate cuts and stimulus measures."
With 10-year German bond yields at 1.4 percent and the
average dividend yield for euro zone blue-chips at 3.4 percent,
the gap in yields between the two asset classes is 200 basis
points, according to Thomson Reuters Datastream.
European stocks have gained nearly 10 percent since
mid-April, mostly boosted by the ECB monetary policy.
"Investors are buying every dip," said David Thebault, head
of quantitative sales trading, at Global Equities.
"With gold now bearish and high-yield debt in a bubble,
equities is the only interesting risky asset class out there."