* FTSEurofirst up 0.6 pct, recovering from Thursday's fall
* Euro STOXX 50 also advances 0.6 pct
* China data boosts mining and bank stocks
* Broker upgrades boost DNB and Vodafone
By Sudip Kar-Gupta
LONDON, Feb 8 European shares rose on Friday to
recover from sharp falls the previous session, as robust Chinese
trade data boosted expectations the global economy would
strengthen and in turn maintain demand for equities.
The pan-European FTSEurofirst 300 index rose 0.6
percent to 1,155.25 points, 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
also rose 0.6 percent to 2,613.72 points.
Data showed 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, which is the world's
biggest consumer of metals, boosted mining stocks and financial
shares which are sensitive to the health of the global economy.
The STOXX Europe 600 banking index and the basic
resources index, which includes mining companies, stood
out as among the best-performing European equity sectors, rising
by 1.1 and 0.5 percent respectively.
Expectations of a gradual economic recovery has led many
investors to step in to buy shares on days when the market has
fallen, preventing any major pull-back on equities in spite of
lingering worries over the euro zone's sovereign debt crisis.
"I think China is clearly moving in the right direction, and
this should support the equity markets," said Cyrille Urfer, who
heads up asset allocation at Swiss bank Gonet.
"We're in a 'risk-on' mode and continental Europe should
continue to do well in this environment. We favour Europe over
the UK," he added.
UPGRADE BOOSTS VODAFONE
Norwegian bank DNB rose towards the top of the
FTSEurofirst 300 index, as Credit Suisse upgraded its rating on
the stock to "neutral" from "underperform" after DNB's
better-than-expected earnings this week.
A broker upgrade also lifted UK telecoms group Vodafone
, whose 1.9 percent rise added the most points to the
FTSEurofirst 300 index after Bank of America Merrill Lynch
raised its rating on it to "buy" from "neutral".
In a research note, Bank of America Merrill Lynch wrote
there were several catalysts that could lift Vodafone's stock,
including a rise in its U.S. dividends, a sale of its stake in
Verizon Wireless and the possibility of share buybacks.
Yet despite the rebound in European equities, some traders
had a more cautious stance on European stock markets.
They argued that uncertainty over Italian elections this
month and persistent economic weakness in Europe - compared to
growth in Asia and the United States - could curb any bigger
moves higher on European stock markets this quarter.
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 - namely betting on a
fall on the DAX and a rise on the S&P 500.
"Signs of a U.S. economic recovery are evident, however the
fundamental issues impacting the euro zone are yet to be dealt
with," he said.
(Reporting by Sudip Kar-Gupta/editing by Chris Pizzey, London
MPG Desk, +44 (0)207 542-4441)