* FTSEurofirst up 0.7 pct, Euro STOXX 50 up 0.6 pct
* New signs of China growth boosts equities
* Banking index is best-performing equity sector
* Concerns linger over Italian election
By Sudip Kar-Gupta
LONDON, Feb 8 European shares rose on Friday,
recovering from a fall the previous session, as strong Chinese
trade data nurtured hope that the global economy will strengthen
and fuel demand for equities.
The pan-European FTSEurofirst 300 index rose 0.7
percent to 1,155.94 points by around midday, bouncing back from
a 0.3 percent fall on Thursday that sent it to its lowest close
since Dec. 31.
The euro zone's blue-chip Euro STOXX 50 index
advanced 0.6 percent to 2,613.76 points.
Chinese exports grew 25 percent in January from a year
earlier versus a Reuters poll forecast of 17 percent, while
imports climbed 28.8 percent, highlighting robust domestic
The new signs of growth in China, the world's biggest
consumer of metals, boosted mining stocks and financial shares
which are sensitive to the health of the global economy.
"The sentiment is there for the market to go higher," said
Caroline Vincent, European equities fund manager at Cavendish
The STOXX Europe 600 bank index was the
best-performing European equity sector, rising 1.6 percent,
while French bank Credit Agricole topped the
FTSEurofirst 300 leaderboard with a 4.2 percent gain.
Vincent said she was growing more positive towards the
European bank sector after some encouraging results from its
companies, with Danske Bank reporting profits above
forecasts this week
"I was 'underweight' on the banks but I'm gradually moving
into a more 'neutral' position. Some of the results that have
been coming out from the banks have been pretty good," she said.
NEAR-TERM SIDEWAYS MARKETS?
Many investors have switched to shares relatively cheaply on
days when stocks have fallen, as fund managers have looked to
move out of bonds and into higher-yielding equities.
This has prevented any bigger and more sustained drops on
However, some traders have said uncertainty over the outcome
of Italian elections this month and persistent weakness in the
euro zone economy due to the region's sovereign debt crisis
could prevent markets from moving much higher soon.
Mike Turner, European equity options broker at XBZ Ltd, said
the Euro STOXX 50 index could trade sideways this month.
"We're still very much rangebound. I think we're likely to
go into a congestion period," he said.
Central Markets senior broker Joe Neighbour recommended a
"pairs trade" to go short on Germany's DAX while going
long on the U.S. S&P 500, essentially betting on a fall
on the DAX and a rise on the S&P 500.
Neighbour also noted that German Chancellor Angela Merkel
faces a tough challenge in elections later this year.
"Euro zone risks remain on the agenda with the Italian
election this month, while Merkel is also going to have a fight
on her hands to win the German election," he said.