* FTSEurofirst 300 up 0.5 pct
* BNP Paribas rises on relief at U.S. sanctions settlement
* Chinese data lift mining sector
By Tricia Wright
LONDON, July 1 European shares advanced on
Tuesday, led by BNP Paribas on relief that it settled
a U.S. sanctions case, while mining stocks rallied on robust
data out of top metals consumer China.
The pan-European FTSEurofirst 300 index was up 0.5
percent at 1,377.07 points by 1037 GMT.
BNP Paribas was a top gainer, rising 3.8 percent in robust
trading volume of almost twice its 90-day daily average, having
lost some 20 percent - or $21 billion of its market value -
since Feb. 13 when it announced the provision for the fine.
The French bank pleaded guilty to two criminal charges and
agreed to pay almost $9 billion to resolve allegations that in
many financial dealings it violated U.S. sanctions against
Sudan, Cuba and Iran.
Analysts and investors said the stock could now recover
ground lost over the last few months.
"The size of the fine we knew, the reaction is more to do
with BNP's extremely reassuring comments and the efforts made to
protect the dividend. The bank is keeping its 2015 targets so
this must mean they enjoyed a very good first half of the year,"
Montsegur Finance fund manager Francois Chaulet said.
Mining stocks were also in demand as upbeat factory
sector activity data out of China reinforced signs of
stabilisation in the economy.
Rio Tinto was among best performers, up 2.6 percent,
having fallen some 6.5 percent this year - underperforming a 4
percent rise for the mining sector as a whole.
An upgrade to "buy" from BofA Merrill Lynch, citing factors
including valuation grounds, also lent support. Rio is on a
12-month forward price/earnings ratio of 9.6 times, against a
long-running average of 12.3 times.
"Valuation is now compelling and we think that iron ore, a
key driver for RIO, is bottoming. Concerns on Chinese real
estate persist but our house view is that these are manageable
and that the government will be successful in walking the fine
line between over-stimulating and an abrupt slow down," BofA ML
analysts said in a note.
BES BOUNCES BACK
Portugal's Banco Espirito Santo recovered some of
its poise after steep falls earlier in the session, finding
support from a short-selling ban on the stock.
Portugal's CMVM market regulator announced late on Monday it
would ban naked short-selling of shares - where an investor is
under no obligation to cover its exposure - in BES and Espirito
Santo Financial Group (ESFG).
The shares advanced 4.3 percent after dropping to an
11-month low on Monday when it failed to allay concerns about
the company's dealings with its founding family and its troubled
Commenting on the broader market trend, McLaren Securities'
managing director Terry Torrison said he expected European stock
markets to trade sideways in the traditionally quiet summer
months of July and August before rising more sharply towards the
end of 2014.
Other analysts also said the market's longer-term outlook
Even though data on Tuesday showed that manufacturing growth
had eased within the euro zone currency bloc, analysts said new
economic stimulus measures from the European Central Bank would
support the region's stock markets.
"I think people will still buy the market on the dip,"
Central Markets Investment Management head of trading Darren
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 Sudip Kar-Gupta; Editing by Louise