* STOXX 600 up 0.7 percent
* FTSE 100 hits record high
* Banks, commodities-linked firms lead
(Adds details and quote, updates prices)
By Kit Rees
LONDON, Jan 3 Strength in financials and
commodity-related stocks continued to underpin European equity
markets with Britain's FTSE 100 starting the new year at
a record high on Tuesday.
The pan-European STOXX 600 index rose 0.7 percent
in early deals, climbing to its highest level since December
Britain's FTSE 100 rose 0.7 to hit a fresh record
high of 7,205.21.00 points. The UK blue-chip index had been
closed in the previous session for a holiday.
"We've been particularly bullish on the FTSE whilst a lot of
people were going short," John Moore, trader at Berkeley
"It's just good news all round - gold's up, we've had a bit
of a bounce back in oil as well ... propping up the European
market, so we've been buying into this in the last week or so.
We expect the trend to continue."
Europe's basic resources sector and oil & gas
were up 1.2 percent and 0.8 percent respectively, buoyed
by rising oil and metals prices.
Among individual stock movers, Italian banks were once again
among top risers, with newly merged Banco BPM gaining
5.4 percent on its second day of trading, building on a strong
rise in the previous session.
Italian banks slumped more than 38 percent in
2016 on worries about their bad loans.
Fellow banking stocks Credit Suisse and Bank of
Ireland were also among top STOXX gainers, with the
European banking index rising 1.3 percent.
InterContinental Hotels Group was another top riser,
up 3.8 percent and boosted by an upgrade to "overweight" from
"equal-weight" from Barclays, sending IHG's shares to a record
Barclays analysts said that they expected IHG's results in
February to be a positive catalyst for the stock, and see a
benefit from the firm's exposure to the U.S.
A downgrade, however, weighed on shares in British retailer
Next, which fell 3.3 percent.
Deutsche Bank cut its rating on the stock to "hold" from
"buy", citing a more challenging year for European general
retailers in 2017, especially in the UK, where they expect
inflation to lead to softening demand.
(Editing by Vikram Subhedar and Dominic Evans)