Banks rally, oil fall lift European shares

European shares gained 1.6 percent on Tuesday as a rally in banks gathered pace following results from Societe Generale and Standard Chartered and oil fell to a 3-month low at $118 a barrel.

By 0837 GMT the FTSEurofirst 300 index of top European shares was up 1.5 percent or 17.6 points at 1,170.2 points, with banks accounting for 7.3 points of that increase, compared with a gain of 3.3 points at 0755 GMT.

Standard Chartered rose nearly 5 percent after the company reported a 31 percent rise in first-half pre-tax profit, helping lift the FTSE 100.

Shares in Societe Generale were up by more than 5.5 percent, while Barclays rose 4.3 percent, Royal Bank of Scotland rose 4.4 percent and Banco Santander rose 2.5 percent.

Softer oil prices and a drop in base and precious metals weighed on commodity shares, pushing down BP by 2.7 percent and miners BHP Billiton and Rio Tinto by 0.2-0.3 percent.