European shares hit highest close in two weeks

By Brian Gorman LONDON, Nov 9 (Reuters) - European shares hit a two-week closing high on Monday, boosted by financial and commodity shares, and after the Group of 20 pledged to keep economic stimulus in place until recovery was assured. The FTSEurofirst 300 index of top European shares rose 2 percent to 1,012.23 points, the highest close since Oct. 22 and the first time since Oct. 23 it has closed above 1,000. The index has gained for four straight days and is up 56.8 percent from its lifetime low of March 9, as investors have become more confident on the prospects for economic recovery. Group of 20 finance ministers pledged on Saturday to prepare strategies to end emergency support for their economies, but to keep the aid flowing until recovery was assured. Other factors were also pushing equities higher, said Franz Wenzel, strategist at AXA Investment Managers, in Paris. "The macroeconomic picture is getting better. The Fed is indicating interest rates won't go higher for some time. "And in Europe, we're behind the curve, so there's no point in lifting rates here before the U.S." He added: "Equities are still cheap. The rally hasn't been enough to pull the trigger as far as valuations are concerned." Banks added most points to the index. Barclays and HSBC ended the day up 1.9 and 1.3 percent respectively ahead of trading updates on Tuesday. UniCredit, which reports results on Wednesday, rose 5.3 percent. BNP Paribas, Banco Santander, Credit Suisse, Deutsche Bank and Societe Generale rose between 2.3 and 4.1 percent. The European bank index is up more than 165 percent from the March low. Investors' appetite for risky assets such as equities grew, with the VDAX-NEW volatility index falling 4.4 percent to a two-week low. The lower the index, which is based on sell and buy options on Frankfurt's top-30 stocks, the higher the market's desire to take risk. Europe's largest insurer Allianz rose 4.3 percent after it posted a forecast-beating rise in third-quarter profit. The results helped lift shares across the sector, with the DJ STOXX index of European insurers gaining 2.7 percent. Prudential gained 5.2 percent, also supported by AXA's decision to buy out its Asian assets, a move traders say highlighted the value of Prudential's own Asian businesses. AXA fell 1.2 percent on its plan for a 2 billion euro ($3 billion) rights issue.. AXA rose 0.4 percent. Cadbury closed just 0.4 percent higher after Kraft Foods chief Irene Rosenfeld refused to sweeten her $16.4 billion bid for chocolate maker Cadbury. Vodafone rose 1.6 percent, ahead of its first-half results on Tuesday. Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 rose between 1.8 and 2.4 percent. Wall Street was higher around the time European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were up between 1.4 and 1.5 percent. COMMODITES GAIN Commodity shares were among top gainers as spot gold hit record highs above $1,100 an ounce as a weaker dollar - more than $1.50 against the euro - boosted its appeal as an alternative asset. Copper and other metals also rose. Miners BHP Billiton, Anglo American, Antofagasta, Rio Tinto and Xstrata rose between 4.2 and 5 percent. Crude futures soared more than 3 percent towards $80 a barrel, after Hurricane Ida affected some U.S. oil and gas facilities. BP, Royal Dutch Shell, Total and StatoilHydro added 1.9 to 2.9 percent. In macroeconomic news, German industrial output surged way above forecasts in September, boosted by a jump in demand for capital goods that set the seal on a strong rebound in Europe's largest economy during the third quarter. But HSBC's strategists remained cautious about the prospects for equities: "The rally in global equity markets has pushed valuations back up to their level of early 2007," they said in a note. "Equity markets are therefore no longer at the bargain levels of early 2009. Whilst not expensive relative to the longer term, we recognise that valuations are now closer to fair value and look less appealing than earlier in the year." (Additional reporting by Atul Prakash; Editing by David Cowell) Keywords: MARKETS EUROPE STOCKS ============================================================= For rolling updates on what is moving European shares please click on ============================================================= For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide................... FTSEurofirst 300 index.............................. DJ STOXX index...................................... Top 10 STOXX sectors........................... Top 10 EUROSTOXX sectors...................... Top 10 Eurofirst 300 sectors................... Top 25 European pct gainers....................... Top 25 European pct losers........................ 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