* FTSEurofirst 300 up 0.9 pct
* BNP Paribas rises on relief at U.S. sanctions settlement
* Chinese data lifts mining sector
* BES shares volatile after short-selling ban
By Tricia Wright
LONDON, July 1 European shares began the month
with a gain, as BNP Paribas rose on relief it had
settled a U.S. sanctions case and mining companies rallied after
encouraging economic data came out of China, the world's top
The pan-European FTSEurofirst 300 index closed up
0.9 percent at 1,382.31 points - notching its biggest one-day
percentage gain since May 8.
BNP Paribas rose 3.6 percent in trading volume of almost
twice its 90-day daily average. It had lost about 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
activity data from China reinforced signs of stabilisation in
Rio Tinto was among the best performers, up 3
percent, after falling about 6 percent this year -
underperforming a 4.8 percent rise for the mining sector as a
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.
Banco Espirito Santo (BES) rebounded from near a
12-month low on Tuesday as the Portuguese bank tried to allay
concern over financial troubles at its parent company and
possible losses at its Angolan unit. The stock
jumped 13.8 percent.
A 40 percent drop in BES stock over the past three weeks led
market regulators in both London and Lisbon to impose a ban on
short-term selling of the bank's shares.
Short selling, which bets a stock will lose value, can cause
shares to fall faster, because short sellers borrow shares, sell
them, then buy them back for less than they sold for.
Commenting on the broader market trend, McLaren Securities'
managing director Terry Torrison said he expected European stock
markets to trade sideways in the usually quiet summer months of
July and August before rising more sharply towards the end of
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
(Reporting by Tricia Wright and Sudip Kar-Gupta; Editing by
Larry King and Pravin Char)