European shares rebound; BP results power oils
* FTSEurofirst 300 rises 0.7 pct; snaps 3 days of losses
* BP's impressive results boost energy sector
* Financial shares under pressure, sector index down 0.6 pct
* For up-to-the-minute market news, click on [STXNEWS/EU]
LONDON, Oct 27 (Reuters) - European shares gained ground onTuesday after slipping in the previous three sessions, with BP's(BP.L) results beating forecasts by a wide margin boostingoils and ING (ING.AS) continuing to cast a shadow on banks. The FTSEurofirst 300 .FTEU3 index of top European shareswas up 0.7 percent at 1,003.44 points at 1150 GMT after falling1.2 percent on Monday. The index is up 20 percent this year andhas gained 55 percent since hitting a record low in March.
Energy shares were among the top gainers, with DJ STOXX oiland gas sector index .SXEP jumping 2.6 percent after BP beatthird-quarter earnings forecasts in a sign its restructuringplans were delivering results. Its cost cuts were ahead oftargets, and its oil and gas output up strongly. [ID:nLQ683027]
Firmer crude oil prices CLc1 ahead of weekly crudeinventory data from the United States also supported the sector.BP rose 4.2 percent, while Royal Dutch Shell (RDSa.L), BG Group(BG.L), Repsol (REP.MC), Total (TOTF.PA) and StatoilHydro(STL.OL) added 0.8 to 2.0 percent.
Investors' appetite for risky assets bounced back, with theVDAX-NEW volatility index .V1XI falling 2.1 percent after ithad jumped 11 percent in the previous session. The lower thevolatility index, which is based on sell and buy options onFrankfurt's top-30 stocks <0#.GDAXI>, the higher is the market'sdesire to take risks.
"From a risk-return profile, equities have gainedattractiveness. But this is not going to be a one way street interms of equities rising constantly," said Klaus Wiener, head ofresearch at Generali Investments.
"There is still a lot of uncertainty in the market. Therewill be spells when people will doubt the sustainability of therecovery," he added.
Investors awaited monthly U.S. consumer confidence data, dueat 1400 GMT, for further market direction.
Across Europe, Britain's FTSE 100 index .FTSE, Germany'sDAX .GDAXI and France's CAC 40 .FCHI rose 0.3 to 0.6percent.
FINANCIALS UNDER PRESSURE
Financials came under pressure as Dutch bancassurer ING'sstruggles rippled across the European banking sector. The DJSTOXX banking index .SX7P fell 0.6 percent, while StandardChartered (STAN.L), HSBC (HSBA.L), Barclays (BARC.L), Lloyds(LLOY.L), Royal Bank of Scotland (RBS.L), BNP Paribas (BNPP.PA)and Societe Generale (SOGN.PA) were down 0.5 to 2.5 percent.
Shares in ING fell for a second day, down as much as 14percent in early trade before recovering, as analysts said apending 7.5 billion euro rights issue was likely to come with upto 50 percent dilution for current shareholders. [ID:nLR375606]
ING sank 18 percent on Monday after it said it would splitin two, repay some of its Dutch state aid early and launch themassive rights issue, all part of its restructuring talks withthe European Union. [ID:nLQ54845]
Spain's second-largest bank BBVA's (BBVA.MC) was down 0.2percent. Its nine-month net profit was slightly weaker than ayear ago and it raised loan provisions to counter toughconditions in core markets Spain and Mexico. [ID:nLR334979]
"Investors are still concerned about committing huge amountsof cash to equities, they are not sure whether there is going tobe a bigger correction," Commerzbank economist Peter Dixon said.
Improved margins helped Dutch chemicals group Akzo Nobel(AKZO.AS) overcome falling sales and post a surprise rise inthird-quarter operating profit, but shares fell 6.6 percent onnagging worries over the company's outlook. [ID:nLQ213523]
On the positive front, Danish wind turbine builder Vestas(VWS.CO) jumped 8 percent after it beat third-quarter profitexpectations as input costs came off their 2008 peaks and stuckto its full-year 2009 guidance. [ID:nLQ533800]
Germany's largest drugmaker Bayer (BAYGn.DE) was up 0.5percent. It reaffirmed its full-year outlook and postedforecast-beating operating earnings, helped by a continuedrecovery at its plastics division. [ID:nLR366504]
Dutch telecoms group KPN (KPN.AS) rose 1.3 percent. Itsthird-quarter operating profit was up slightly as the companymanaged to squeeze out costs, but it said it saw "no sign ofrecovery yet" in its business markets due to the recession. [ID:nLR201684] (Additional reporting by Joanne Frearson; editing by KarenFoster)
Source: Reuters
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