Financials, miners lead European stock rally

By Eva Kuehnen

FRANKFURT, March 12 (Reuters) - European shares rallied for a second day in a row on Wednesday as optimism sparked by major central banks' moves to ease credit market problems lifted financial stocks, while bid talk pushed mining shares higher.

Among major movers, UK insurer Standard Life (SL.L: Quote, Profile, Research) jumped 12.9 percent after it beat forecasts with a 43 percent rise in 2007 profit.

The pan-European FTSEurofirst 300 index closed 1.2 percent higher at 1,284.81 points, having hit its intra day high at 1,296.05 points.

The index has gained almost 2 percent this week as mainly financial stocks recovered, having borne the brunt in recent market falls, stemming from a crisis in the U.S. subprime mortgage market.

The index has lost almost 15 percent so far this year. Major U.S. stock indexes, which jumped more than 3 percent on Tuesday after a coordinated central bank move to add billions of dollars of liquidity to struggling credit markets, were also higher.

"The worst fears are temporarily taken out of the market, but this doesn't solve the problem in the long term," said Markus Steinbeis, head of European equities at Pioneer Investments in Munich.

The rally was very much technically driven, he added, which was reflected in the sector allocation.

Beaten-down financial and insurance stocks rose while recent defensive favourites such as telecom stocks and utilities lost.