European shares rise, U.S. rate cut eyed

European shares rose in early trade on Tuesday, tracking global equity gains on hopes that the United States would cut rates to head off a recession, with banks and commodity stocks the top gainers.

At 0813 GMT, the FTSEurofirst 300 index of top European shares was up 0.7 percent at 1,326.44 points.

Banks were generally higher, with fraud-hit French lender Societe Generale recovering 2.6 percent, HSBC gaining 0.7 percent and UBS 1.3 percent.

Miners tracked higher metal prices, with Xstrata gaining 3.7 percent, Anglo American 2 percent and Rio Tinto 1 percent.

Similarly, heavyweight oil stock BP gained 1.2 percent, benefiting from crude steady just under $91 a barrel.

Shares in travel group TUI jumped 3.7 percent in Germany and London-listed TUI Travel nearly 5 percent after TUI Travel said it was in talks about merging its TUIfly airline with Lufthansa’s Germanwings.

But with the Fed expected to announce a further cut in rates on Wednesday, the focus was on the U.S. central bank after a torrid month for equities.

“What we’ve had is a mix of weak data, poor corporate numbers, fears over writedowns and problems at monoline insurers, with the element of a rogue trader thrown in, all of which have conspired to create a perfect storm of uncertainty,” said Barclays strategist Henk Potts.

“It now all comes down to the ability and willingness of central banks to act.”

Reuters