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Europe shares record biggest daily jump in 17 mths

By Joanne Frearson LONDON, May 10 (Reuters) - European shares soared on Monday, registering their biggest one-day percentage rise in 17 months, as a $1 trillion emergency rescue package to stabilise the euro lifted financial and oil stocks. By 1132 GMT, the pan-European FTSEurofirst 300 index of top shares was up 6.7 percent at 1,032.38 points, bouncing back after suffering their worst weekly performance since November 2008 on Greek debt contagion fears. Financial stocks led the risers, with the STOXX Europe 600 banking index jumping 13 percent following a 14 percent drop last week. HSBC, BNP Paribas, Barclays, Allied Irish Banks, KBC Groep and Societe Generale surged 8.6 to 29.3 percent. Greek banks soared 14.9 percent after slipping 16.3 percent in the previous session. "(It's a) very impressive rally and shows the extent to which the markets have been relieved by some conclusion to the Greek debt crisis," said Tim Hughes, head of sales trading at IG Index. The market was given support after a rescue package was hammered out by European Union finance ministers, central bankers and the International Monetary Fund in weekend negotiations. Euro zone central banks have begun buying government bonds and the ECB said it would also re-start dollar lending operations and bring back some of the emergency liquidity measures it had started to phase out. Other financial stocks also soared on the news. Insurers Aegon, AXA and ING Groep gained 9.8 to 20.2 percent. ENERGY STOCKS GAIN Energy stocks were in demand as crude prices surged 3.9 percent on expectations the EU's rescue package would help improve energy demand. BG Group, Royal Dutch Shell and Total rose 3.1 to 7 percent. Investor appetite for risky assets jumped, with the VDAX-NEW volatility index down 13 percent. 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. Despite the general positive reaction, some analysts advised caution. "This is not a solution, it is a shuffling of the cards, concentrating debt on the strongest nations. Without radical budget restructuring, the problem will not go away," MF Global analyst Simon Maughan said. In economic news, the Bank of England kept interest rates at 0.5 percent and made no change to its asset purchase target on Monday, keeping in place stimulus measures designed to nurse the economy back to health. Meanwhile, Britain's two biggest opposition parties resumed talks on Monday to reach a deal to govern after an inconclusive election last week that has left markets looking for a swift resolution to political deadlock. Across Europe, the FTSE 100 index soared 5.2 percent, Germany's DAX rose 4.9 percent and France's CAC 40 jumped 8.9 percent. Spain's IBEX gained 12.2 percent, Portugal's PSI 20 rose 10.2 percent and Italy's benchmark gained 9.8 percent. (Additional reporting by Blaise Robinson in Paris; Editing by Mike Nesbit) 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........................ Main stock markets: Dow Jones............... Wall Street report ..... Nikkei 225............. Tokyo report............ FTSE 100............... London report........... Xetra DAX............. Frankfurt market stories CAC-40................. Paris market stories... World Indices...................................... Reuters survey of world bourse outlook.......... Western European IPO diary........................... European Asset Allocation......................... Reuters News at a Glance: Equities............... Main currency report:............................... Keywords: MARKETS EUROPE STOCKS/ =2 (joanne.frearson@thomsonreuters.com; +44 207 542 2773, Reuters Messaging:joanne.frearson.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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