European shares rise as financial stocks gain

European shares rise, shrugging off losses at the start of trading as firmer financial stocks lifted the region's equity markets.

London - European shares rose on Tuesday, shrugging off losses at the start of trading as firmer financial stocks lifted the region's equity markets.

The pan-European FTSEurofirst 300 and STOXX 600 indexes were both up by 0.6 percent, rebounding from losses of a similar scale incurred on Monday.

The STOXX Europe 600 Banks Index outperformed with a 1.1 percent rise, adding the most points to Europe's stock markets.

KBC and ING both climbed after Goldman Sachs upgraded them both to “buy” from “neutral”.

Italian bank UniCredit also rose 2 percent ahead of a board meeting expected to formally approve the search for a new chief executive.

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Shares in French household equipment manufacturer SEB surged 11 percent as investors welcomed SEB's move to buy WMF, a German maker of coffee machines and silverware, from KKR in a deal worth 1.6 billion euros ($1.8 billion) including debt.

Nevertheless, some traders were sceptical about the market rebound, with concerns about the possibility of a U.S. interest rate increase in coming weeks having impacted world stock markets over the last month.

In spite of Tuesday's move higher, the FTSEurofirst remains down by around 4 percent over the last month.

“This is a bear market rally,” said Andreas Clenow, chief investment officer of ACIES Asset Management in Zurich, pointing to headwinds from future US rate rises and slow global economic growth.

Clenow said he remained “short” on European equities, namely betting on future declines on that market.

Hantec Markets' analyst Richard Perry also expected stock markets to stay choppy before Britain's June 23 vote on membership of the European Union, and until investors got more clarity on the timing of any future US rate rises.

“I expect us to be in a sideways trend over the coming month, although the longer-term trend is still a downwards one,” said Perry.

REUTERS