European shares bounce back ahead of US jobs data

* FTSEurofirst 300 rises 0.8 pct ahead of jobs data

* Focus on Irish shares after stress test results

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

By Atul Prakash

LONDON, April 1 (Reuters) – European shares bounced back on
Friday on hopes strong U.S. jobs data will signal a recovery in
the labour market and show the economic recovery was gathering
pace, though equities faced some technical resistance levels.

Investor appetite for risky assets rose, with the VDAX-NEW
volatility index (.V1XI: Quote, Profile, Research) falling 5.6 percent to a one-month low.
Financials stocks were broadly higher as investors looked beyond
Irish banks’ stress test results on Thursday.

At 1133 GMT, the FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index of top
European shares was up 0.8 percent at 1,133.90 points. The index
ended the hectic first quarter with a tiny gain of 0.3 percent.

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 labour market has turned the corner after
lagging the broader economic recovery. [ID:nN30121489]

But that would also raise monetary tightening concerns.

“A big number would be positive in the medium-term, but it’s
a negative in the near-term because you get higher rate hike
fears. People in the market will start worrying that the Fed is
going to hike rates prematurely,” said Graham Bishop, equity
strategist at RBS.

However, analysts remained bullish on the stock market’s
medium-term outlook saying valuations were low and the corporate
picture was improving.

“We are positive on the outlook for equities. We see that
corporate earnings are well underpinned overall and that should
be supportive,” said Anko Beldsnijder, managing director of
MainFirst Asset Management, which manages 1 billion euros.

“We have added the metals and mining sector again to
overweight because of attractive valuations.”

Technical factors were expected to cap gains in the near
term. 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.

Irish stocks were in the spotlight, with Bank of Ireland
(BKIR.I: Quote, Profile, Research) up 39 percent, Allied Irish (ALBK.I: Quote, Profile, Research) up 16 percent and
Irish Life (IPM.I: Quote, Profile, Research) down 54 percent after Ireland’s central bank
said stress tests showed key lenders needed to recapitalise to
the tune of 24 billion euros, in line with expectations.

Bank of Ireland, which has been told to raise 5.2 billion
euros, said it is attempting to raise funds privately. If it
cannot, it will be majority owned by the government.

“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.

The STOXX Europe 600 banking index (.SX7P: Quote, Profile, Research) rose 1.2 percent,
with Barclays (BARC.L: Quote, Profile, Research) up 4 percent, Royal Bank of Scotland
(RBS.L: Quote, Profile, Research) up 3 percent and Noreda Bank (NDA.ST: Quote, Profile, Research) up 0.8 percent.

Nomura suggested to become long Noreda Bank saying Nordic
banks are well capitalised and highly geared to higher rates. It
also recommends to become long HSBC (HSBA.L: Quote, Profile, Research).

But Italian banks came under pressure after Intesa Sanpaolo
SpA (ISP.MI: Quote, Profile, Research) said it would announce its position on the question
of a possible capital hike after its board meetings on April 5.
Intesa shares fell 2.8 percent.

Concerns about the debt situation in peripheral euro zone
countries remained. Portugal sold 1.65 billion euros in an
extraordinary sale of short-term bonds on Friday, but analysts
said its high cost of borrowing was still likely to force it
into an international bailout within months.

Among individual movers, Frankfurt stock market operator
Deutsche Boerse (DB1Gn.DE: Quote, Profile, Research) fell 2 percent after Nasdaq OMX
(NDAQ.O: Quote, Profile, Research) and IntercontinentalExchange (ICE.N: Quote, Profile, Research) launched a rival
bid for NYSE Euronext (NYX.N: Quote, Profile, Research). [ID:nL3E7F11TO]
(Additional reporting by Blaise Robinson in Paris; Editing by
Hans Peters)

European shares bounce back ahead of US jobs data