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European shares rally; UBS hits 15-month high

Blaise Robinson
Tuesday, 30 Oct 2012 | 9:51 AM ET

* FTSEurofirst 300 up 0.6 pct, Euro STOXX 50 up 0.8 pct

* Euro STOXX 50 halted by 50-day moving average

* UBS extends gains, up 14 pct this week on massive job cuts

* BP stock surges; but still down 33 pct since oil spill

PARIS, Oct 30 (Reuters) - European stocks rose on Tuesday, led by Swiss bank UBS, which confirmed it will slash 10,000 jobs, and by oil major BP after it raised its dividend for the second time in less than a year.

Volumes were expected to remain thin, however, with the effects of a massive storm hitting the eastern United States set to keep Wall Street closed for a second day.

At 0926 GMT, the FTSEurofirst 300 index of top European shares was up 0.6 percent at 1,099.54 points. The index slipped 0.3 percent on Monday in its lowest volume in nearly two months as U.S. stock markets closed due to Hurricane Sandy.

Wall Street will remain shut on Tuesday, with investor attention turning to whether markets would be able to resume activity on the month's final trading day on Wednesday.

``Volumes are very low with Wall Street, which makes today's gains quite fragile, and the potential impact of the storm for the insurance sector, estimated at around $20 billion, has not been priced in yet,'' said Patrice Perois, trader at Kepler Capital Markets in Paris.

``And on the earnings side, beyond a few good news, the mood isn't quite reassuring. For every 10 earnings reports, we're getting two profit warnings,'' he said.

UBS was the top blue-chip gainer, up 6 percent to a 15-month high, after confirming it would wind down its fixed income business and cut 10,000 jobs. The stock has jumped 14 percent so far this week.

German rival Deutsche Bank also gained ground, up 4 percent after it posted a 20 percent rise in pre tax profit and raised its job cut targets.

BP shares were in the spotlight, climbing 3.6 percent after the oil major hit by a huge oil spill in the Gulf of Mexico in 2010 said it will raise its dividend for the second time in less than a year, to help restore investor confidence.

The stock is still down 33 percent from before the 2010 oil spill, while Europe's STOXX oil and gas index is down 4 percent over the same period.

Around Europe, the UK's FTSE 100 index was up 0.6 percent, Germany's DAX index up 0.9 percent, and France's CAC 40 up 0.7 percent.

The euro zone's blue chip Euro STOXX 50 index was up 0.8 percent at 2,497.41 points, reversing Monday's losses.

The index crossed back above the 23.6 percent Fibonacci retracement level of the rally from late July to mid September, sending a positive technical signal, but was halted by a key resistance level at 2,503 - its 50-day moving average.

``We've been stuck in a tight range for a week now, there's no clear trend at the moment,'' a Paris-based trader said.

``We need a clean break above the 50-day moving average to trigger more buying, otherwise the index risks slipping down slowly and reverse the gains made since early August.''