Euro Shares Jump as Barclays Surges 73%

European shares jumped on Monday, snapping a five-session losing streak, as a 73-percent surge in British bank Barclays boosted embattled financials, while oil shares tracked firmer crude prices.

The FTSEurofirst 300 index of leading European shares closed 3.2 percent higher at 784.66 points after falling in 12 of the previous 13 sessions. The DJ Stoxx banks index rose 7 percent.

Financial stocks spiked, with Lloyds jumping 32 percent, ING up 27.8 percent, Royal Bank of Scotland rising 19.8 percent, BNP Paribas up 16.9 percent and Societe Generale rising 11 percent.

Pfizer's $68 billion acquisition of rival Wyeth also boosted sentiment, with analysts saying the move opened the possibility of more deals as firms seek to position themselves defensively in the midst of a faltering economy.

But analysts said the financial sector might continue to struggle this quarter despite Monday's surge.

"There is company-specific reassurance coming out but given the quantum of the mark-downs we saw last week -- things never tend to go down in a straight line -- it was fair to anticipate a rebound," said Jonathan Lawlor, head of European research, Fox-Pitt, Kelton.

"The key question would be the extent to which we can hold on to the rebound. And broadly speaking we remain cautious on the banking sector ... not forgetting that we have to go through year-end results," he added.

Europe's crisis-hit banks unveiled further job cuts and billions of euros more in losses.

ING said it faced a 2008 loss of 1 billion euros, ousted its chief executive and cut 7,000 jobs, but news the Dutch government was guaranteeing assets on more generous terms than expected boosted its stocks.

BNP Paribas, France's top bank, said it expected to post a fourth-quarter net loss of around 1.4 billion euros ($1.8 billion), but Barclays said it had no need to raise capital and remained profitable despite an 8 billion pound ($11 billion) 2008 writedown.

"The news about Barclays was certainly better than expected and, to a certain extent, supports sentiment in the market," said Heinz-Gerd Sonnenschein, strategist at Postbank in Germany.

"It is good that banks come clean with their situation and that is rewarded. However, a general all-clear for the market cannot be given," he said.

Oils Advance, Philips Gains

Oil shares gained tracking a rise in crude prices. BP, Royal Dutch Shell, BG Group, Tullow Oil and Total added 4.2-9.6 percent.

Dutch electronics giant Philips Electronics rose 8.3 percent after posting its first quarterly loss since 2003 but saying it would accelerate its restructuring program.

But despite Monday's gains in Europe stocks, market outlook remained grim.

A Group of 20 finance official told Reuters that the International Monetary Fund had slashed its forecasts for 2009 global growth to 0.5 percent from 2.2 percent.

Adding to the gloom, Europe's second biggest steelmaker Corus said it was cutting 3,500 jobs worldwide, mostly in Britain, as it restructured to battle a global downturn in demand from automotive and construction industries.

"The economic environment remains extremely fragile," said Commerzbank strategist Hans-Juergen Delp. "Companies such as Nokia and Microsoft have already been battered and the negative sentiment is likely to return fast."

Among significant losers, Nokia fell 2.2 percent, while pharmaceutical firm Sanofi Aventis dropped 1.9 percent as traders cited market talk it could bid for Dutch vaccine maker Crucell NV.

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