European Shares Edge Higher, Banks Extend Gains

Across Europe, the FTSE 100 index was down 0.3 percent, Germany`s DAX rose 0.3 percent and France`s CAC 40 was up 0.1 percent.

European shares drifted higher in early trade on Tuesday as banks continued their upward journey after surging in the previous session, while Siemens advanced after posting positive results.

At 0926 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 786.42 points after jumping 3.2 percent in the previous session, led by banks.

Banks added the most points to the index again on Tuesday, with Barclays rising 12 percent, adding to a 73-percent surge in the previous session, when it said it had no need to raise fresh capital.

Lloyds was up 12.4 percent, Royal Bank of Scotland jumped 15.2 percent and Societe Generale advanced 3 percent.

"The soothing noises coming from the financial sector have given the markets a breather from the downward spiral," said Chris Hossain, senior sales manager at ODL Securities.

"A positive finish for the Dow, and a relatively quiet day for economic releases, means we may seem some relative safety in the equity markets."

Siemens rose 4 percent after the German industrial conglomerate said profit covering its three main divisions for the first quarter of fiscal 2009 to Dec. 31 rose 20 percent to 2.005 billion euros ($2.64 billion), beating market expectations. Software AG, Germany's second-biggest software company, jumped 9 percent after posting a rise in 2008 sales and operating profit that beat market expectations thanks to its market entry into Brazil and integration of its webMethods unit.

Across Europe, the FTSE 100 index was down 0.3 percent, Germany's DAX rose 0.3 percent and France's CAC 40 was up 0.1 percent.

COMMODITY STOCKS DOWN

Miners retreated with a decline in metals prices. BHP Billiton, Anglo American, Vedanta Resources, Xstrata and Antofagasta fell between 0.5 percent and 4.2 percent.

Energy stocks were also under pressure. BP, Royal Dutch Shell, gas producer BG Group and Total shed 0.3-1.9 percent.

"There is still so much uncertainty surrounding the markets and poor economic data is still coming out," said James Hughes, analyst at CMC Markets.

"Toxic debts are still a problem as no one knows their extent. And until those numbers become a little bit clearer, we are going to be under pressure."

Among other stocks, Dutch telecoms group KPN rose 3.4 percent after it reported fourth-quarter core earnings in line with expectations, helped by its German mobile unit E-Plus expanding its service revenue in a shrinking overall market.

In economic news, German corporate sentiment unexpectedly improved for the first time in eight months in January, buoyed slightly by a rise in business expectations, a closely watched survey showed.