European shares extend rally

After a shaky start, European shares resumed their upward climb on Tuesday propelled higher by financial shares and commodities.

At midday, the pan-European FTSE Eurofirst 300 rose 1.4 per cent to 840.02, Germany's Xetra Dax added 1.1 per cent to 4,604.29, in France the CAC 40 gained 1.8 per cent to 3,229.77. In London, the FTSE 100 gained 1.8 per cent to 4,226.62.

Allied Irish Bank rose 13.5 per cent to €2.6 , Bank of Ireland rose 6.7 per cent to €1.4, while Switzerland's UBS rose 8.9 per cent to SFr15 and Germany's Commerzbank gained 4.5 per cent to 6.5 per cent to to €6.4.

Credit Suisse predicted that government's may intervene in the auto sector to protect jobs.

"Without support, auto firms may be forced into deeply discounted rights issues or asset sales/closures. We continue to prefer the relative strength of BMW and Daimler balance sheets over Renault," the brokerage said.

The head of Renault said Spanish car sales would halve in the last three months of the year. However, Renault shares climbed 8.7 per cent to €17.75.

Metals companies also rose with French miner Eramet up 7.9 per cent to €18.60, France's ArcelorMittal up 10.8 per cent to €18.85 and Sweden's SSAB up 5.4 per cent to SKr55.

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