RTRS: European shares hit one-week high; financials gain
* Prudential gains on talk deal with AIG could be off
* U.S. Q1 GDP second reading expected at 1230 GMT
* For up-to-the-minute market news, click on [STXNEWS/EU]
By Harpreet Bhal
LONDON, May 27 (Reuters) - European shares rose to a one-week high on Thursday, with sentiment lifted by China's denial it was reviewing its investments in euro zone debt, and as Prudential (PRU.L) rose on talk its deal with AIG may be off.
By 1222 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 2.0 percent at 991.47 points, after rising to a one-week intraday high of 994.92 earlier in the session.
The index is still down around 11 percent from a mid-April peak, on worries about Europe's debt crisis.
"There's still a general reflection that equity markets have become pretty oversold during the last couple of weeks. Global economic numbers all look good still," said Jim Wood-Smith, head of research at Williams de Broe
China remains committed to its long-standing goal of diversifying its foreign exchange reserves, a government official said on Thursday, helping to soothe global markets unnerved overnight by a Financial Times report that the country was reviewing its euro-zone bond holdings. [ID:nTOE64Q04P]
The report had been cited by traders as a reason for U.S. shares giving up early gains to close lower on Wednesday.
Among individual movers, Prudential jumped 5.8 percent on market talk its $35.5 billion takeover of AIG's (AIG.N) Asian unit could be off, piling pressure on the insurer in the final stages of its efforts to sway investors. [ID:nLDE64Q0X2]
A source close to the deal, however, said there had been no change to the insurer's bid for AIA and that it was pushing ahead with the plans.
Within the sector, Belgium-based insurance group Ageas (AGES.BR) rose 9.4 percent after it cut its exposure to southern European government debt by 4.8 billion euros, helping to secure its credit rating. [ID:nLDE64Q0KJ]
Banks were among the biggest sector risers, adding to sharp gains in the previous session. Barclays (BARC.L), HSBC (HSBA.L), Societe Generale (SOGN.PA), BNP Paribas (BNPP.PA) and Deutsche Bank (DBKGn.DE) rose 2.1 percent to 4.5 percent.
Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI rose 1.8 percent to 2.3 percent.
MAN GROUP GAINS
Hedge fund firm Man Group (EMG.L) advanced 6.8 percent after the company reported better-than-expected annual profits and said a decline in its asset values had bottomed out since March. [ID:nLDE64N12N]
Energy companies drew support from higher crude prices CLc1, which rose above $73, benefitting from data showing an increase in U.S. demand for fuel and as the dollar weakened across the board.
BP (BP.L) rose 3.3 percent. The company faces a defining day in its five-week Gulf of Mexico oil spill disaster as its latest attempt to seal a gushing well will be deemed either a success or a failure. [ID:nN26238003]
BG (BG.L), Royal Dutch Shell (RDSa.L), Total (TOTF.PA) and ENI (ENI.MI) rose 1.1 percent to 3.3 percent.
Miners also moved higher with firmer metal prices, building on strong gains in the previous session, buoyed by reports Australia may not implement a planned tax rise.
Anglo American (AAL.L), Kazakhmys (KAZ.L), BHP Billiton (BLT.L), Xstrata (XTA.L) and Rio Tinto (RIO.L) added 2.8 percent to 3.6 percent.
Later in the session investors will focus on U.S. Q1 GDP data, expected at 1230 GMT. The second reading for the data is forecast to show an annualised growth rate of 3.4 percent in the first quarter, up from the previous reading of 3.2 percent.
U.S. weekly jobless claims are also due at 1230 GMT.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graph on stock performance in 2010: here Latest wrapup on the euro zone debt crisis: [ID:nSGE64Q00Q] Coming events in euro zone debt crisis: [ID:NLDE62N12L] Graphic on the euro zone debt: link.reuters.com/fyw72j Global investing blog here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ (Additional reporting by Chris Barnett; editing by Elaine Hardcastle) ((harpreet.bhal@thomsonreuters.com; +44 207 542 4533; Reuters Messaging: harpreet.bhal.thomsonreuters.com@reuters.net))
