European shares hit one-week high; financials gain

* FTSEurofirst 300 up 2.0 percent

* Prudential gains on talk deal with AIG could be off

* U.S. Q1 GDP second reading expected at 1230 GMT

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

By Harpreet Bhal

LONDON, May 27 (BestGrowthStock) – European shares rose to a
one-week high on Thursday, with sentiment lifted by China’s
denial it was reviewing its investments in euro zone debt, and
as Prudential (PRU.L: ) rose on talk its deal with AIG may be off.

By 1222 GMT, the FTSEurofirst 300 (.FTEU3: ) index of top
European shares was up 2.0 percent at 991.47 points, after
rising to a one-week intraday high of 994.92 earlier in the
session.

The index is still down around 11 percent from a mid-April
peak, on worries about Europe’s debt crisis.

“There’s still a general reflection that equity markets have
become pretty oversold during the last couple of weeks. Global
economic numbers all look good still,” said Jim Wood-Smith, head
of research at Williams de Broe

China remains committed to its long-standing goal of
diversifying its foreign exchange reserves, a government
official said on Thursday, helping to soothe global markets
unnerved overnight by a Financial Times report that the country
was reviewing its euro-zone bond holdings. [ID:nTOE64Q04P]

The report had been cited by traders as a reason for U.S.
shares giving up early gains to close lower on Wednesday.

Among individual movers, Prudential jumped 5.8 percent on
market talk its $35.5 billion takeover of AIG’s (AIG.N: ) Asian
unit could be off, piling pressure on the insurer in the final
stages of its efforts to sway investors. [ID:nLDE64Q0X2]

A source close to the deal, however, said there had been no
change to the insurer’s bid for AIA and that it was pushing
ahead with the plans.

Within the sector, Belgium-based insurance group Ageas
(AGES.BR: ) rose 9.4 percent after it cut its exposure to
southern European government debt by 4.8 billion euros, helping
to secure its credit rating. [ID:nLDE64Q0KJ]

Banks were among the biggest sector risers, adding to sharp
gains in the previous session. Barclays (BARC.L: ), HSBC (HSBA.L: ),
Societe Generale (SOGN.PA: ), BNP Paribas (BNPP.PA: ) and Deutsche
Bank (DBKGn.DE: ) rose 2.1 percent to 4.5 percent.

Across Europe, Britain’s FTSE 100 (.FTSE: ), Germany’s DAX
(.GDAXI: ) and France’s CAC 40 (.FCHI: ) rose 1.8 percent to 2.3
percent.

MAN GROUP GAINS

Hedge fund firm Man Group (EMG.L: ) advanced 6.8 percent after
the company reported better-than-expected annual profits and
said a decline in its asset values had bottomed out since March.
[ID:nLDE64N12N]

Energy companies drew support from higher crude prices
(CLc1: ), which rose above $73, benefitting from data showing an
increase in U.S. demand for fuel and as the dollar weakened
across the board.

BP (BP.L: ) rose 3.3 percent. The company faces a defining day
in its five-week Gulf of Mexico oil spill disaster as its latest
attempt to seal a gushing well will be deemed either a success
or a failure. [ID:nN26238003]

BG (BG.L: ), Royal Dutch Shell (RDSa.L: ), Total (TOTF.PA: ) and
ENI (ENI.MI: ) rose 1.1 percent to 3.3 percent.

Miners also moved higher with firmer metal prices, building
on strong gains in the previous session, buoyed by reports
Australia may not implement a planned tax rise.

Anglo American (AAL.L: ), Kazakhmys (KAZ.L: ), BHP Billiton
(BLT.L: ), Xstrata (XTA.L: ) and Rio Tinto (RIO.L: ) added 2.8 percent
to 3.6 percent.

Later in the session investors will focus on U.S. Q1 GDP
data, expected at 1230 GMT. The second reading for the data is
forecast to show an annualised growth rate of 3.4 percent in the
first quarter, up from the previous reading of 3.2 percent.

U.S. weekly jobless claims are also due at 1230 GMT.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graph on stock performance in 2010:
http://graphics.thomsonreuters.com/10/GLB_PRFE0510.html
Latest wrapup on the euro zone debt crisis: [ID:nSGE64Q00Q]
Coming events in euro zone debt crisis: [ID:NLDE62N12L]
Graphic on the euro zone debt: http://link.reuters.com/fyw72j
Global investing blog http://blogs.reuters.com/globalinvesting/
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Stock Market Advice
(Additional reporting by Chris Barnett; editing by Elaine
Hardcastle) (([email protected]; +44 207 542
4533; Reuters Messaging:
[email protected]))

European shares hit one-week high; financials gain