European stocks higher; banks, commods gain

European shares were higher in early trade on Monday, rising for the a consecutive session, with banks and commodity stocks gaining as investors become more confident about the prospects of a global recovery.

By 0709 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.4 percent at 970.99 points. The index is up around 50 percent since reaching a lifetime low in early March and is up about 16 percent for the year.

"Markets have been reflecting the government stimulus around the world and getting far too excited … Not sure if this is going to be sustainable as we head up towards the (UK) bank holiday weekend," said Justin Urquhart Stewart, director at Seven Investment Management.

"We have to be extremely careful of the market getting too carried away and investors losing track of valuations," he said.

Banks added the most points to the index. Barclays, UniCredit and Lloyds Banking Group were up 1.5 to 3.1 percent. Energy stocks were higher as crude rose above $74 a barrel extending its rally to trade near a 10-month high, on global recovery optimism. BG Group, Cairn Energy, Royal Dutch Shell and Tullow Oil were up 0.3 to 1.1 percent.

Miners tracked higher metal prices. Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata were 1.4 to 3.7 percent higher.