Buoyant financials help revive Europe stocks rally

* FTSEurofirst 300 up 0.6 pct in first session of Q2

* Euro STOXX 50 up 0.7 pct, resistance looms at 50-day mark

* Bank of Ireland surges, Irish Life tumbles on bailout news

* U.S. monthly payrolls seen as double-edge sword

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Blaise Robinson

PARIS, April 1 (Reuters) – European stocks rallied on their
first session of the quarter on Friday, as investors bet that a
strong reading of U.S. payrolls would eclipse recent jitters
over the euro zone debt crisis and violence in the Arab world.
The rally was paced by financial stocks such as Barclays
(BARC.L: Quote, Profile, Research), BBVA (BBVA.MC: Quote, Profile, Research) and BNP Paribas (BNPP.PA: Quote, Profile, Research), up 2.1 to
3.8 percent, as investors were happy to turn the page on Irish
banks’ stress test results.

The cost of insuring senior financial debt also eased, with
the Markit iTraxx senior financial index down 12 basis points to
139 basis points on Friday, while Europe’s main fear gauge, the
VDAX-NEW volatility index (.V1XI: Quote, Profile, Research), fell 4 percent to a one-month
low of 18.8 points.

At 0854 GMT, the FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index of top
European shares was up 0.6 percent at 1,132.01 points. The
benchmark index ended the hectic first quarter with a tiny gain
of 0.3 percent.

The euro zone’s blue chip Euro STOXX 50 (.STOXX50E: Quote, Profile, Research) index
was up 0.7 percent at 2,932.15 points, moving toward its 50-day
moving average at 2,950 points, a key resistance level.

“The market has been extraordinarily resilient in the face
of all the recent shocks, which is a signal of strong inflows,”
said Jacques Henry, analyst at Louis Capital Markets in Paris.

“In the latest data we saw a bit of outflows on the short
term, but I don’t think the positive tide in favour of stocks is

Investors awaited the all-important U.S. monthly jobs data,
due at 1230 GMT. Nonfarm payrolls are forecast to have gained
190,000 after adding 192,000 in February, which would be a
strong signal that the labor market has turned the corner after
lagging the broader economic recovery. [ID:nN30121489]

“The market’s focus is moving back to the macro picture, and
today’s payrolls should be relatively strong,” said Jean-Yves
Dumont, head of asset allocation strategy and funds at Dexia
Asset Management, which manages about 86 billion euros ($122.2

“But looking beyond it, the figure is a double-edge sword.
Stronger-than-expected data will embolden the Fed’s hawks,”
Dumont warned.

Irish financial stocks were in the spotlight, with Bank of
Ireland (BKIR.I: Quote, Profile, Research) up 22 percent, Allied Irish (ALBK.I: Quote, Profile, Research) down 6
percent and Irish Life (IPM.I: Quote, Profile, Research) down 45 percent after Ireland’s
central bank said fresh stress tests showed the country’s four
remaining lenders needed to recapitalise to the tune of 24
billion euros, in line with expectations.

Ireland’s Finance Minister Michael Noonan also dropped a
previous threat to impose losses on senior unsecured bonds in
Bank of Ireland and Allied Irish.

“Everybody knew that the Irish banks needed additional
capital … But the most important thing is that there won’t be
any haircut on bonds,” a Paris-based analyst said.
(Reporting by Blaise Robinson; additional reporting by
Alexandre Boksenbaum-Granier; Editing by Hans Peters)
($1=.7035 Euro)

Buoyant financials help revive Europe stocks rally