European shares hit their highest close in more than 28 months on Tuesday, as eurozone finance ministers inched towards improving a rescue fund and investor confidence grew in Germany. The FTSEurofirst 300 index of top European shares rose 0.9 percent to 1,167.87 points, the highest close since September 2008. The benchmark is up more than 80 percent from its lifetime low of March 2009.
Banks to gain included Spanish heavyweights Banco Santander and BBVA, up 4 and 3.7 percent respectively. Bank of Ireland and KBC rose 7.7 and 7.1 percent respectively. European finance ministers inched forward on Tuesday towards beefing up the eurozone's rescue fund and preparing new stress tests for the region's shaky banks.
"Clearly the fact that finance ministers are meeting and heads of state are going to meet in March indicates that they are taking the (eurozone debt) problem more seriously than three months ago," said Richard Batty, strategist at Standard Life Investments in Edinburgh. "There is some movement towards a resolution though it is a very long process. The market is giving some form of benefit of the doubt to that process."
Miners gained as metal prices rose. Copper came within a whisker of record highs on Tuesday as investors shone the spotlight on improving economic growth prospects and a softer dollar helped boost sentiment. Antofagasta, Eurasian Natural Resources Corp and Kazakhmys rose between 2.7 and 3 percent.
Rio Tinto rose 1.5 percent after it reported producing record volumes of key product iron ore in the fourth quarter. Energy companies gained as Brent crude topped $98. BP, BG and Repsol rose between 1.7 and 4 percent. Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC40 rose between 0.9 and 1.2 percent. Spain's benchmark rose 3 percent. On the downside, GlaxoSmithKline shares extended losses, falling a further 1.9 percent after shedding 1.6 percent on Monday when the drugmaker announced a 2.2 billion pounds ($3.4 billion) legal charge that will wipe out profits in the fourth quarter. Investor sentiment in Germany, Europe's biggest economy, surged in January as expectations increased that its powerful export machine will create jobs and investment this year to spur further robust growth.