Portugal aid request lifts European shares

* FTSEurofirst 300 index gains 0.2 percent

* Portugal bank stocks rise after Portugal seeks bailout

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

By Joanne Frearson

LONDON, April 7 (Reuters) – European shares rose on
Thursday, led higher by financials after Portugal said it would
seek financial aid, but traders were wary that the bailout may
not signal the end of the euro zone debt crisis.

Portugal is the third euro zone country to seek a bailout,
and investors are now watching to see if Spain could be next,
though Spanish Economy Minister Elena Salgado told national
radio that was not an option. [ID:nMDT009862]

By 0834 GMT the pan-European FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index
of top shares was up 0.2 percent at 1,149.75 points ahead of an
interest rate decision by the European Central Bank.

“Portugal was so much expected,” said Lothar Mentel, chief
investment officer at Octopus Investments, which manages 2.5
billion sterling ($4.1 billion). “Now there is more focus on
Spain; the pressure is not really going to go away.”

Mentel also said he expected there to be a shift towards
value stocks from growth in the next half of the year if the
global economy slows.

Banking stocks featured among the best performers, with the
STOXX Europe 600 Banks index (.SX7P: Quote, Profile, Research) gaining 1.2 percent.

Portugal’s Millennium bcp (BCP.LS: Quote, Profile, Research), Banco Espirito Santo
(BES.LS: Quote, Profile, Research) and BPI (BBPI.LS: Quote, Profile, Research) gained 3.7 to 4.6 percent on the aid
request, outperforming Portugal’s PSI 20 (.PSI20: Quote, Profile, Research), which was 1
percent higher.

Spain’s IBEX 35 (.IBEX: Quote, Profile, Research), however, was down 0.2 percent.

“We’ve seen some selling in Spanish banks,” said a head of
sales trading at a European investment bank. “Attention has just
switched to the state of the property market in Spain, the
amount of writedowns the banks need to take, and that they’re
not out of the water yet.”
(Reporting by Joanne Frearson; Editing by Will Waterman)
($1=.6137 Sterling)

Portugal aid request lifts European shares