Europe shares close at 1-week high as insurers gain

By Harpreet Bhal

LONDON (BestGrowthStock) – European shares rose on Tuesday, with insurers among the biggest gainers as Aegon (AEGN.AS: ) allayed fears of a share issue to repay state aid and bid talk helped peer Aviva (AV.L: ) push higher.

The FTSEurofirst 300 index of top European shares closed 1.1 percent higher at 1,056.54 points, ending at its highest level in a week.

Trading volumes, however, were low due to the holiday period. Volume on the FTSEurofirst 300 was at just 57 percent of its 90-day average.

Dutch insurer Aegon jumped 6.8 percent as it soothed investor concern about prospects for a large share issue to repay state aid. It made concessions to the European Commission over the aid and said it can pay back part of the support at lower costs.

Within the sector, Aviva rose 5.1 percent as traders cited talk of bid interest from French peer Axa (AXAF.PA: ), which added 2.9 percent. Both firms declined to comment. Old Mutual (OML.L: ), Prudential (PRU.L: ) and ING (ING.AS: ) were up 2.5 to 5.1 percent.

Heavyweight banks HSBC (HSBA.L: ), BNP Paribas (BNPP.PA: ) and Deutsche Bank (DBKGn.DE: ) were up 2 to 2.2 percent.

Investors believe equity markets are likely to be rangebound in the coming months as uncertainty over the pace of economic recovery continues to act as a headwind.

“There are clear signals of a slowdown in the U.S. and some sort of slowdown in China and investors will face tough questions for the second half on whether or not the momentum is going to last,” said Thierry Serero, fund manager at Octopus Investments in London.

U.S. economic data on Tuesday showed new home building rose at a much weaker pace than expected in July and permits hit a 14-month low, though sturdy growth in industrial output implied the economy has enough strength to keep growing.

Across Europe, Britain’s FTSE 100 (.FTSE: ), Germany’s DAX (.GDAXI: ) and France’s CAC-40 (.FCHI: ) added 1.4 to 1.8 percent.

“With thin volumes and limited fundamentals to work on, traders are potentially going to be left with their fingers hovering above the sell button as the dog days of August drag on,” said Ben Critchley, sales trader at IG Index.

The Thomson Reuters Peripheral Eurozone Countries Index (.TRXFLDPIPU: ) added 1.8 percent. Strong demand for Irish and Spanish debt auctions eased concerns about the pressure on costs of funding for highly indebted euro zone countries.

MINERS STRONG

Mining firms were higher as metals prices benefited from a weak dollar and expectations of strong demand for raw materials. Eurasian Natural Resources (ENRC.L: ), Rio Tinto (RIO.L: ) and Kazakhmys (KAZ.L: ) rose 3 to 4 percent.

German salt miner K+S (SDFG.DE: ) rose 5.7 percent on takeover speculation in the sector after the world’s largest fertilizer maker, Potash Corp (POT.TO: ), rejected BHP Billiton’s (BLT.L: ) $39 billion takeover proposal as “grossly inadequate.

Upbeat corporate earnings also helped some stocks advance. The world’s top brickmaker, Wienerberger (WBSV.VI: ), jumped 9.3 percent after it raised core earnings by 20 percent in the second quarter.

Carlsberg (CARLB.CO: ) rose 2.1 percent after the brewer beat forecasts to post a rise in second-quarter operating profit and raised its 2010 outlook.

(Editing by Michael Shields)

Europe shares close at 1-week high as insurers gain