Shares rise on prospect of improved rescue fund

Eurostoxx 50: 2,945.62 (+34.99) Frankfurt DAX: 7,143.45 (+65.39) Paris CAC: 4,012.68 (+37.27):EUROPEAN SHARES hit their highest close in more than 28 months yesterday as euro zone finance ministers inched towards improving a rescue fund and investor confidence grew in Germany.

The FTSEurofirst 300 index of top European shares rose 0.9 per cent to 1,167.87 points, the highest close since September 2008. The benchmark is up more than 80 per cent from its lifetime low of March 2009.

Banks to gain included Spanish heavyweights Banco Santander and BBVA, up 4 and 3.7 per cent respectively. Bank of Ireland and KBC rose 7.7 and 7.1 per cent respectively.

European finance ministers inched forward towards beefing up the euro zone’s rescue fund and preparing new stress tests for the region’s shaky banks.

Richard Batty, strategist at Standard Life Investments in Edinburgh, said: “Clearly the fact that finance ministers are meeting and heads of state are going to meet in March indicates that they are taking the [euro zone debt] problem more seriously than three months ago.”

Miners gained as metal prices rose. Copper came within a whisker of record highs as investors shone the spotlight on improving economic growth prospects and a softer dollar helped boost sentiment.

Antofagasta, Eurasian Natural Resources and Kazakhmys rose between 2.7 and 3 per cent. Rio Tinto rose 1.5 per cent after it reported producing record volumes of key product iron ore in the fourth quarter.

Energy companies gained as Brent crude topped $98. BP, BG and Repsol rose between 1.7 and 4 per cent.

On the downside, GlaxoSmithKline shares extended losses, falling a further 1.9 per cent after shedding 1.6 per cent on Monday when the drugmaker announced a £2.2 billion legal charge that will erase profits in the fourth quarter.

Investor sentiment in Germany, Europe’s biggest economy, surged in January as expectations increased that its powerful export machine will create jobs and investment this year to spur further robust growth.

The ZEW think-tank based in Mannheim, Germany, said its monthly index jumped to 15.4 from 4.3 in December, its highest since last July. – (Reuters)