European shares rise; Barclays strong after results

European shares rose in early trading on Tuesday, buoyed by stronger banks after Barclays posted forecast-beating results, while oil majors drew strength from rallying crude prices.

By 0808 GMT, the pan-European FTSEurofirst 300 index was up 1 percent at 1001.67 points, breaching the 1,000 mark for the first time in nearly two weeks.

Barclays surged 6.5 percent after beating expectations with profits of over 11 billion pounds last year, and said it had started the year well..

Within the sector, HSBC, Societe Generale, BNP Paribas, UBS and Deutsche Bank added 1.5 to 3.6 percent.

With U.S. markets shut on Monday and several Asian exchanges closed for the Lunar New Year holiday, direction is likely to be dictated by economic data set for release on Tuesday such as Germany's ZEW analyst and investor sentiment index and British inflation numbers.

"Whilst the banking sector initially will have some enthusiasm, there will be a pall over the market as you see weaker ZEW figures in Germany and inflation figures rising in Britain," said Justin Urquhart Stewart, director at Seven Investment Management.

"The key issue that is going to be hanging over Europe is what is going to be happening with Greece … because there is still no resolution. The market desperately wants to have a clear line," he said

Euro zone states urged Greece on Monday to announce more deficit-control steps by mid-March if needed, but said nothing new of last week's pledge to defend the country if debt market pressures spin out of control.

Among individual movers, Vallourec rose 4.6 percent after the seamless tube maker said on Monday it would build a new factory in the United States, investing $650 million in the project to meet the needs of the North American oil and gas market.

L'Oreal fell 3.3 percent after the French firm pledged to improve turnover and earnings in 2010 as it posted fourth-quarter sales below forecasts. In an interview, the company's chief executive said it was ditching its target of double-digit growth in earnings per share.