European shares at one-week high

European shares hit their highest closing level in nearly a week on Tuesday, with oil majors contributing to the bulk of gains as commodity prices were boosted by strong manufacturing data from around the world. The pan-European FTSEurofirst 300 index closed 0.9 percent higher at 1,142.01 points, with Britain's FTSE 100, which has a large proportion of commodity shares, rising 1.9 percent on its first trading day of the year.
Commodity stocks were buoyed by upbeat demand expectations following reassuring manufacturing data from China, the United States and Europe, with the STOXX Europe 600 oil and gas index up 2.5 percent as crude prices hovered near a 27-month high before later paring gains.
BP climbed almost 6 percent and earlier hit a six-month high after the Daily Mail newspaper reported rival Royal Dutch considered a take-over bid, and as investors were reassured by comments that suggested damages from its oil spill could be half the expected level. Within the sector, BG Group added 2.7 percent while Total was up 1.3 percent.
Adding to the upbeat view on the pace of economic recovery following the strong manufacturing figures in the previous session, data showed new orders received by US factories unexpectedly rose in November, and orders excluding transportation recorded their largest gain in eight months. Investors will scour the minutes of the Federal Open Market Committee's meeting from December 14, for an insight into the US central bank's outlook on the economy. The minutes are due at 1900 GMT, after European markets close.
Appetite for risky assets rose, with the VDAX-NEW volatility index falling 3 percent. The lower the index, the higher the market's desire to take risk. Banks, seen as a barometer for risk, were among the gaining sectors. Barclays, Societe Generale and Deutsche Bank rose 2.4 to 4.2 percent.