European shares turn positive; banks recover

European shares turn positive; banks recover

London: European shares turned positive on Wednesday after European Commission President Jose Manuel Barroso said the commission will soon present options for the introduction of common euro bonds, which many believe can help resolve the debt crisis.

Banks gave up early losses to turn flat, while the FTSEurofirst 300 index of top European shares was up 0.5% at 905.24 points at 0743 GMT after falling to a low of 892.01 earlier in the session.

The crisis, which has potential to derail global economic recovery, prompted the United States to urge European leaders to take more effective coordinated fiscal policy measures, while China said rich economies should show they are serious about tackling the euro zone debt problem.

“A lack of leadership is really a matter of concern for the market. A lot of worries are now focussed on Germany in terms of splits there on how to deal with the region’s debt crisis," said Keith Bowman, equity analyst at Hargreaves Lansdown.

“Valuations are low, but the problem is that they are dependent on future earnings. The concern is that if we have a deteriorating economic backdrop, then earnings outlook could also deteriorate. Stocks could be cheaper tomorrow."

At 0709 GMT, the FTSEurofirst 300 index of top European shares was down 0.6% at 895.05 points after hitting a two-year low on Tuesday before closing 1.1% higher. The index is down about 20% so far this year.

Banks were among the worst performers, with the European sector index down 1.6%, Societe Generale down 4.9% and BNP Paribas down 4.7%.