RTRS: Europe stocks end sharply up as commods, banks soar
* FTSEurofirst 300 index closes 8.9 percent higher
* Second-biggest one-day percentage gain on record
* Banks, energy, mining stocks rally
By Atul Prakash
LONDON, Nov 24 (Reuters) - European shares ended sharply higher on Monday, as Washington's move to rescue banking giant Citigroup (C.N: Quote, Profile, Research, Stock Buzz) and the UK government's measures to help the economy boosted sentiment and lifted commodities and banks.
The FTSEurofirst 300 .FTEU3 index of top European shares bounced back to finish 8.9 percent higher at 828.63 points -- its second-biggest one-day percentage rise on record. The index lost 11.5 percent last week to hit a five-and-a-half-year low.
It has fallen 45 percent this year, hurt by the financial sector crisis and the prospect of a deep recession.
Banking shares surged after slipping in the previous sessions, with UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) soaring 21.4 percent, Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) jumping 18.4 percent, HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) climbing 17.3 percent and Royal Bank of Scotland adding 7.2 percent.
Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) closed 10 percent higher after its shareholders backed a $10 billion fundraising, but Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz), which sought new funds too, slipped 4.5 percent as investors absorbed the weekend rescue of Citigroup.
"The rescue of Citigroup, which provided a huge amount of uncertainty last week, hopes that Barack Obama can put the right team together to deal with the economic turmoil and expectations of a stimulus package from the UK are helping the markets to bounce back," said Barclays Stockbrokers strategist Henk Potts.
"In the short term, equities are still expected to remain volatile. The reality is economic growth is slowing down and corporate profitability is under pressure."
Britain and the United States moved to unveil their newest strategies to battle the global economic crisis even as European fears of a long-lasting recession deepened. [ID:nSP406175]
The United States agreed to inject $20 billion of new capital to rescue one of the world's top banks and European leaders said they would stand by European industry, especially the automobile sector.
Britain will spend billions of borrowed pounds to fund tax cuts in the hope of preventing a recession spiralling into a slump, Finance minister Alistair Darling said, but he slashed his economic growth forecast for this year to 0.75 percent from 1.75-2.25 percent.
SUSTAINED RALLY?
Darren Winder, strategist at Cazenove, said that a rally in stock markets on Monday was unlikely to prompt a sustained rise, given the ongoing credit crisis and weak economic outlook.
"The markets are bumping along the bottom at the moment ... we are stabilising but with high levels of volatility."
Concerns Europe has entered a deep recession which could last well into next year were reinforced when a key survey of German corporate sentiment hit its lowest level in nearly 16 years in November. [ID:nLO702651] [ID:nLO23326]
A 7 percent jump in crude prices helped energy stocks. BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), gas producer BG Group (BG.L: Quote, Profile, Research, Stock Buzz) and Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) added between 7.4 and 14.1 percent.
Among individual companies, Anheuser-Busch InBev (INTB.BR: Quote, Profile, Research, Stock Buzz) launched a planned eight-for-five rights issue at a steeply discounted price of 6.45 euros per share to part-fund InBev's $52 billion purchase of Anheuser-Busch, sending its stock price 20 percent down.
Roche Holding AG (ROG.VX: Quote, Profile, Research, Stock Buzz), the world's largest maker of cancer drugs, rose 7.7 percent after it said that Avastin met its primary endpoint in a Phase III breast cancer trial.
Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC-40 .FCHI were up between 9.8 percent and 10.3 percent.
