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Euro Stocks End Higher, Banks Gain

Europe's major indexes ended slighlty higher Monday, despite early losses, as banking stocks made firm gains and helped to overcome worries about a U.S. recession.

"We were expecting a spate of negative news at the start of the year, and we've been served," said Arthur van Slooten, strategist at Societe Generale, in Paris.

"We're getting close to a point where the U.S. economy could tip into recession. But we still expect some growth in the second half of the year, and the good news is that the Fed seems open to the idea that further rate cuts might be needed as they understand what's at stake."

But the state of U.S. financial stocks is still a concern, as Citigroup could write down as much as $24 billion and lay off 20,000 workers as part of its cost-cutting plans to boost capital. Details of its plans are expected when it reports earnings Tuesday. Merrill Lynch faces writedowns of as much as $15 billion.

Gold hit a new record above $900 an ounce in the early morning, with investors continue to buy the safe-have asset in the face expected interest-rate cuts in the U.S.

Investors are now looking for the Federal Reserve to cut interest rates by 50 basis points at its January meeting.

French utility Suez dropped 1.1 percent after Credit Agricole said it would sell a 2.07 percent stake in the firm, worth a potential 1.25 billion euros ($1.85 billion). Gaz de France, which is merging with Suez, was down 1.6 percent.

In earnings news, Dutch printer and photocopier maker Oce reported a 34 percent rise in fourth-quarter net profit, sending shares higher by more than 12 percent. But the company said it was too early to give guidance for 2008.

IG Group also issued results. The UK spread-betting firm announced a 63 percent rise in pre-tax profit, boosted by the volatile financial market conditions in the wake of the recent credit crunch. But the stock sank 8.2 percent.

And the Eni-led energy consortium and the Kazakhstan government reached an agreement Sunday night to develop the Kashagan oilfield, the Financial Times reported, sending energy stocks like Total, Royal Dutch Shell and Eni higher.

-- Reuters contributed to this report