Deutsche Bank and Pearson help European shares rally
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* STOXX Europe 600 up 0.6 pct
* UK mid-cap index hits record high
* Deutsche Bank climbs to 2-week high
By Atul Prakash
LONDON, Oct 4 (Reuters) - European shares advanced on Tuesday, with Germany's Deutsche Bank hitting a two-week high following recent steep losses and the world's biggest education company Pearson gaining after encouraging comments by Morgan Stanley.
Pearson rose 5.6 percent, the top gainer in the pan-European STOXX 600 index, after Morgan Stanley said the company was unlikely to issue a profit warning, "meaning the shares could recover sharply on the Q3 results".
Deutsche Bank rose 2.7 percent to a two-week high. Its shares had slumped to a record low on Friday before bouncing back on expectations of a swift deal with U.S. authorities over a multi-billion dollar penalty.
HSBC said that despite Deutsche Bank's obvious operational shortcomings, fears over the bank's solvency were overdone. However, HSBC cut its target price for the bank, forecasting challenging conditions for the banking environment. Continuación...