* FTSEurofirst 300 up 2.2 percent
* KBC and ING lifted by Goldman Sachs upgrade
* French group SEB rises after WMF acquisition
* Concerns remain over possible future U.S rate hikes (ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). Adds closing prices)
By Sudip Kar-Gupta and Danilo Masoni
LONDON/MILAN, May 24 (Reuters) - European shares rose to their highest point in almost 4 weeks on Tuesday as firmer financial stocks lifted the region’s equity markets.
The pan-European FTSEurofirst 300 and STOXX 600 indexes rose 2.2 and 2.3 percent respectively, extending earlier gains helped by a weakening euro and a reversal of crude oil prices into positive territory.
Sentiment was also underpinned by comments from European Central Bank supervisory chief Daniele Nouy, who said the bank was working on new proposals for non-performing loans that remain one of the biggest problems for the region’s economy.
The STOXX Europe 600 Banks Index outperformed with a 3.5 percent rise. KBC and ING climbed 5 and 3.9 percent respectively after Goldman Sachs upgraded them both to “buy” from “neutral”.
Italian bank UniCredit also rose 4.9 percent ahead of a board meeting expected to formally approve the search for a new chief executive. Traders
Shares in French household equipment manufacturer SEB surged more than 10 percent as investors welcomed SEB’s move to buy WMF, a German maker of coffee machines and silverware, from KKR in a 1.6 billion-euro deal.
Swiss drugmaker Galenica fell more than 6.6 percent, among the biggest losers on the FTSEurofirst 300, as investors were disappointed by its decision to postpone a break- up of the group.
Some traders remained sceptical about the market rebound, with concerns about the possibility of a U.S. interest rate increase in coming weeks having weighed on world stock markets over the last month.
In spite of Tuesday’s move higher, which lifted the FTSEurofirst to its highest closing level since April 29, the index remains down by over 6 percent so far this year.
“This is a bear market rally,” said Andreas Clenow, chief investment officer of ACIES Asset Management in Zurich, pointing to headwinds from future U.S. rate rises and slow global economic growth.
Today’s European research round-up
ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.
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Mike Dolan, Markets Editor EMEA.
Editing by Richard Balmforth