* STOXX 600 ends up 1.5 percent
* Banks top sectoral gainer on U.S. rate hike prospects
* Builder CRH helps lift sector index to 10 year high
* Basic resources, defence stocks also in demand
(Adds details, closing prices)
By Danilo Masoni
MILAN, March 1 European shares climbed to
15-month highs on Wednesday, with banks and construction stocks
leading the rally on renewed optimism over a huge economic
stimulus in the United States.
U.S. President Donald Trump pledged $1 trillion of
infrastructure spending in a speech to Congress on Tuesday,
while policymakers stoked speculation of a rate hike in the
world's largest economy this month.
Banks, which benefit from higher interest rates and
have been among the biggest beneficiaries of the global stock
market rally that followed Trump's election last year, rose 3
percent, making them the biggest sectoral gainer in Europe.
The pan-European STOXX 600 index rose 1.5 percent
to its highest since December 2015, scoring its biggest one-day
gain since the U.S. presidential vote in November, while
Britain's FTSE ended at its highest level on record.
"Animal spirits have taken over ... today's boost is all
down to the president's speech to Congress last night," said
Neil Wilson, senior market analyst at ETX Capital in London.
Also driving European markets were PMI surveys showing euro
zone factory activity rose to the fastest rate in nearly six
years, as well as developments in the French presidential
France's CAC hit a 15 month high on Wednesday, while
Germany's DAX surged to a 22-month high, both gaining around 2
percent. In spite of widespread euphoria, some fund managers
expressed doubts about how long the rally would continue.
"We are bullish on equities in 2017, but we think that
equities have run ahead of themselves in the short-term," fund
managers at Finnish private bank Evli said in a weekly note,
cutting their equities exposure to neutral. They said, however,
they would buy on any weakness.
Irish building materials firm CRH gained 4.5 percent
after the U.S.'s biggest producer of asphalt for highway
construction, and third biggest supplier of ready-mixed concrete
and construction aggregates posted strong earnings growth.
The firm was well positioned to benefit from increased
infrastructure spending in the United States in the medium term,
CEO Albert Manifold said. Shares in CRH jumped 8.1 percent on
the day of Trump's election.
Gains in CRH helped Europe's construction index rise
2.1 percent to its highest since August 2007.
Defence stocks remained in demand following Trump's call
this week for a "historic" increase in military spending,
something a U.S. budget official quantified as a $54 billion
Europe's defence sector index climbed to a
19-month high on Wednesday, with Rheinmetall among the
top gainers, up 5.1 percent, after the German military
technology group reported better than expected results.
Europe's mining index was up 2.9 percent as copper
prices rose after manufacturing data from top consumer China
showed potential for strong demand, reinforcing worries about
shortages due to supply disruptions.
Top STOXX loser was Covestro . The stock fell 6.7
percent after pharmaceuticals giant Bayer sold a 1.5
billion euros stake in its plastics subsidiary to help raise
cash for its takeover of seeds maker Monsanto.
(Reporting by Danilo Masoni; Additional reporting by Helen
Reid; Editing by Mark Potter)