Energy and banking stocks boost European shares, M&S slumps

LONDON: European equities climbed to a four-week high on Wednesday, with energy shares rising on the back of a rally in oil and Greek banks gaining after politicians made progress on talks over securing a debt relief deal.

However, British retailer Marks & Spencer slumped after saying that its turnaround plan would hit profits in the short term.

The FTSEurofirst 300 was up 0.9 percent by 0816 GMT, having hit its highest level since late April and adding to the previous session's jump of more than 2 percent. The STOXX Europe 600 index was also up 0.9 percent.

Energy shares were in demand after oil prices pushed closer to $50 a barrel, with U.S. crude hitting its highest in more than seven months after industry data suggested a larger-than-expected drawdown in U.S. crude inventories last week.

The STOXX Europe 600 Oil and Gas index rose 1.5 percent, helped by a gain of 3.5 percent and 1.1 percent respectively in BP and Royal Dutch Shell.

Greek shares rose 1.3 percent after euro zone finance ministers agreed with Greece and the International Monetary Fund on a deal that will address Athens' requests for debt relief.

"The agreement should ensure that Greece remains little source of negative headline risk throughout the rest of the year ... the big question over the next 12 months is how quickly capital controls can be lifted and the economy can gradually return towards a path to normality," Deutsche Bank analysts said in a note.

Greek banks were up about 1 percent, while the European banking index rose 2 percent. Shares in Alpha Bank, Eurobank Erasias, Caxiabank and Deutsche Bank rose between 1.8 percent and 4.4 percent.

Among standout losers, Marks & Spencer slumped 7.8 percent, the top decliner in the FTSEurofirst 300 index, after the company told investors to expect a short-term hit to profit as it pushes through a plan to turn around its underperforming clothing and homeware business.

"Clothing and general merchandise performance remains unsatisfactory as difficult trading conditions persist, which leaves everything on the shoulders of a stronger performing but much lower-margin food segment," Accendo Markets head of research, Mike van Dulken, said.

"A troubled retail division has become a major issue as the core customer base ages and it likely struggles to entice a younger demographic more likely to buy online."