Banks lead surge in European shares

European shares soared to their highest close in 12 weeks on Thursday, with banks surging after European Union leaders struck a deal to help resolve the eurozone debt crisis. The STOXX Europe 600 Banking Index rose 8.9 percent, though strategists warned that the market gains may be short-lived after more details of the plan become available.
French banks, heavily exposed to eurozone peripheral debt, were among the biggest gainers. They had suffered in recent months on worries that a Greek default would result in a deep banking crisis. BNP Paribas, Societe Generale and Credit Agricole rose 16.9, 22.5 and 22 percent, respectively. Insurer Axa rose 14.7 percent.
Such a crisis would affect banks beyond the eurozone, and other gainers included British bank Barclays, up 17.6 percent, on relief the worst-case scenario seems to have been averted for now. The FTSEurofirst 300 index of top European shares rose 3.7 percent to 1,020.10 points, the highest close since August 3. Trading volume was high, at 137.7 percent of the 90-day average for the index, breaking a recent pattern of weak volumes.
The pan-European index is down 9 percent this year on worries about the eurozone and slowing global growth. But it is up 19.6 percent from a 2011 low it hit last month on optimism policymakers are acting to stem the crisis. The index broke through, but then closed just below, a key technical level, 1,021.8, the 50 percent retracement of its fall from a 2011 high in February to the low in September.
Economically sensitive sectors such as mining and autos were among the other big gainers. The STOXX Europe 600 Basic Resources Index rose 6.4 percent. Optimism on the eurozone deal, which may help avert recession, helped to boost base metals prices, especially in dollar terms, as the euro gained. Across Europe, Britain's FTSE 100 rose 2.9 percent; Germany's DAX and France's CAC40 rose 5.4 and 6.3 percent, respectively. The auto sector, which includes several German companies, helped the DAX, despite Daimler and Volkswagen reinforcing the gloomy outlook for Europe's car industry.