London: European shares rose sharply early on Thursday on hopes that the economic downturn is moderating, with investors training their sights on the G-20 summit meeting in London and a European Central Bank (ECB) rate decision.
At 0817 GMT (1:47pm), the FTSEurofirst 300 index of top European shares was up 3.5% at 771.34 points, on track for its third straight day of gains.
Banks, commodity and auto stocks were the top gainers, boosted by better than feared US home sales, factory and auto data.
Barclays, BNP Paribas, HSBC, Societe Generale, UBS and UniCredit rose between 4.4 and 8.3%.
Deutsche Bank rose 7.6% after its chief executive said in a newspaper interview that the bank had solid results in March and did not need additional capital.
G-20 leaders have gathered in London to tackle the global financial crisis and France and Germany have demanded they act fast on promises to prevent a repeat of the worst economic crisis since the 1930s.
A draft communique obtained by Reuters included a pledge to deliver “the scale of sustained effort necessary to restore growth” without making any commitments beyond the trillions already being spent to stabilize banks, shore up demand and limit job losses.
“We think the policy effort will work,” said Bernard McAlinden, strategist at NCB Stockbrokers in London. “But there will continue to be volatility in markets.” Other analysts said they had few expectations for the meeting.
“I would expect a bland statement of the least common denominator and expectations shouldn’t be set too high. They can’t agree details of a banking regulatory system -- that would take years to work out,” said Justin Urquhart Stewart, investment director at Seven Investment Management.
“There will be greater focus on hedge funds - they are the easiest targets, but controlling offshore centres is like nailing down floorboards - hit one and the other comes up.”
Across Europe Britain’s FTSE 100, Germany’s DAX and France’s CAC-40 were up between 3.2 and 3.9%.
Analysts expect the ECB to take euro zone interest rates down to an all-time low of 1.0% when the bank announces its decision at 1145 GMT (5:15pm).
While this could be the ECB’s last rate cut for some time, it looks likely to tweak its overnight deposit rate - the rate currently setting the bar in money markets - to avoid driving interbank rates too low.
Miners rose as copper prices hit five-month highs, buoyed by hopes of economic recovery.
Anglo American, BHP Billiton, Lonmin, Rio Tinto, Vedanta Resources and Xstrata rose between 4.1 and 5.8%.
Oils gained as crude prices rose more than 3% to more than $49 a barrel.
Total, ENI, BP, Royal Dutch Shell and Repsol rose between 1.7 and 2.6%.
Automakers rose after a report said US auto sales fell 37% in March, a smaller than expected drop that encouraged hope that the world’s largest car market is nearing a bottom after a freefall that has pulled the industry into a deepening crisis. Daimler, Peugeot, Porsche, Renault and BMW rose between 6.4 and 10.3%.
Swiss Re, the world’s second-larger reinsurer, rose 5.4% after saying it plans to cut 10% of its workforce over the next 12 months in a bid to cut costs by 400 million Swiss francs ($349.6 million) by 2010.
Allianz, Aviva, AXA, Legal & General were up between 5.3 and 9.8%.
The FTSEurofirst 300 has risen 19.5% since hitting a lifetime low on 9 March, but is still down 7.3% in 2009, hurt by a banking crisis and several major economies in recession.