May 25, 2016 / 11:07 AM / 2 years ago

European shares hit 4-week high, boosted by banks and oil

* FTSEurofirst 300 index gains 1 pct

* Greek deal lifts banks

* Energy shares mirror higher crude oil

* M&S slumps after short-term profit warning (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. See the bottom of the report for more details)

By Atul Prakash and Alistair Smout

LONDON, May 25 (Reuters) - European equities jumped to a four-week high on Wednesday, with banks buoyed after politicians made progress on talks over securing a debt relief deal for Greece, and energy shares rising on the back of a rally in oil.

The FTSEurofirst 300 and the STOXX Europe 600 index both hit their highest levels since late April, both rising 1 percent to add to the previous session’s jump of more than 2 percent.

Greek shares rose 0.7 percent after euro zone finance ministers agreed with Greece and the International Monetary Fund on a deal that will address Athens’ requests for debt relief.

“The agreement should ensure that Greece remains little source of negative headline risk throughout the rest of the year ... The big question over the next 12 months is how quickly capital controls can be lifted and the economy can gradually return towards a path to normality,” Deutsche Bank analysts said in a note.

Greek banks were up about 1 percent, while the euro zone banking index rose 2.3 percent. Shares in Alpha Bank, Caixabank, Banco Popular and Deutsche Bank rose between 1.6 percent and 5.7 percent.

Energy shares were in demand after oil prices pushed closer to $50 a barrel, with U.S. crude hitting its highest in more than seven months after industry data suggested a larger-than-expected drawdown in U.S. crude inventories last week.

The STOXX Europe 600 Oil and Gas index rose 1.4 percent, helped by gains of 1.4 percent and 1.3 percent respectively in BP and Royal Dutch Shell.

Among fallers, British retailer Marks & Spencer slumped after it said its turnaround plan would hit profits in the short term.

It was down 8 percent, the top decliner in the FTSEurofirst 300 index, after the company told investors to expect a short-term hit to profit as it pushes through a plan to turn around its underperforming clothing and homeware business.

“Clothing and general merchandise performance remains unsatisfactory as difficult trading conditions persist, which leaves everything on the shoulders of a stronger performing but much lower-margin food segment,” Accendo Markets head of research, Mike van Dulken, said.

“A troubled retail division has become a major issue as the core customer base ages and it likely struggles to entice a younger demographic more likely to buy online.”

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.

If you have any thoughts, suggestions or feedback on this, please email

Mike Dolan, Markets Editor EMEA. (Editing by Gareth Jones)

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