European shares stay higher

European stocks rose for a third day on Thursday, after German and French leaders said they were determined to keep Greece in the eurozone, and the US Federal Reserve led a concerted action to address banks' problems in securing dollar funding. Euro zone banks rose 6.3 percent, with BNP Paribas up 13.4 percent, boosted by the Fed and other central banks saying they would reintroduce three-month dollar liquidity operations in the fourth quarter.
The FTSEurofirst 300 index of top European shares rose 2.1 percent to 932.16 points, the highest close in a week. Volume was high, 18 percent above the 90-day average for the index. "The politicians seem to have acted to avoid the eurozone blowing itself up in the near-term, and inevitably that means the market goes up," said Andy Lynch, fund manager at Schroders, which manages $310 billion.
On the downside, Swiss bank UBS plunged 10.8 percent in volumes more than four times the 30-day average after unveiling a $2 billion rogue trade loss. In a joint statement in Paris and Berlin, French President Nicolas Sarkozy and German Chancellor Angela Merkel urged Greek leaders to implement the terms of a bailout plan while saying they were determined to keep Greece in the eurozone.
The eurozone banking sector is down 36.9 percent this year, as the region's debt crisis takes its toll. Recently, eurozone banks have experienced renewed strains finding dollar funding, with distrust between banks having grown due to the sovereign debt crisis. "(The liquidity move) is certainly a plus, and that is how the markets have taken it, because the French banks have had difficulties accessing dollars," Manoj Ladwa, senior trader at ETX Capital said. Across Europe, Britain's FTSE 100 rose 2.1 percent; Germany's DAX and France's CAC40 rose 3.2 and 3.3 percent respectively. Spain's IBEX rose 3.6 percent after Spain was the latest peripheral country to tap markets on Thursday.
The Pan-European index's gains in the past three days mean it has now lost just under half the ground it gained when climbing to a peak in February, 2011, from its lifetime low of March 2009. Among individual shares, H&M rose 7.1 percent after the Swedish budget fashion group posted surprisingly strong August sales despite soft consumer sentiment across its main markets.