European shares rise as banks, miners shine

By Peter Starck

FRANKFURT, Feb 18 (Reuters) - European shares rallied on Monday, wiping out the previous session's losses, lifted by robust gains for British banks such as Barclays (BARC.L: Quote, Profile, Research) and miners, which drew strength from higher metals prices.

The British government's decision to temporarily nationalise troubled bank Northern Rock NRK.L, takeover talk and expectations of higher dividends fuelled banks, with Barclays up 7.6 percent and Lloyds TSB (LLOY.L: Quote, Profile, Research) advancing 7.3 percent.

The Sunday Times newspaper reported that Lloyds and Barclays would likely increase their payouts to shareholders.

In the mining sector, BHP Billiton (BLT.L: Quote, Profile, Research) and Rio Tinto (RIO.L: Quote, Profile, Research) each put on more than 4 percent. Copper prices MCU3 rose more than 2.5 percent to $7,970 a tonne and platinum <XPT=> set a record high $2,107 an ounce.

Energy stocks firmed as oil prices CLc1 ticked up for a fourth day. BP (BP.L: Quote, Profile, Research) rose 2.7 percent, Royal Dutch Shell (RDSa.L: Quote, Profile, Research) 2.4 percent and Total (TOTF.PA: Quote, Profile, Research) 2.1 percent.

The FTSEurofirst 300 index of top European shares closed 2 percent higher at 1,335.30 points, trimming its year-to-date losses to 11.4 percent. With U.S. markets closed for the Presidents' Day holiday, volumes in Europe were moderate.

The benchmark index remains over 18 percent below its multi-year peak set in July 2007. Many analysts define a 20 percent drop as a bear market and some strategists said Monday's revival might prove short-lived.

"I'm more inclined to view this as a bounce in a bear market," said Andrew Lynch, a portfolio manager at Schroders.