European shares snap 4-day losing run

8220;Shares in Asia were higher so that is giving us a mild boost and some people think the falls yesterday may have been a bit overdone,8221; said Markus Huber,senior trader at ETX Capital.

The pan-European FTSEurofirst 300 index of top shares was up 0.4 per cent at 1,109.02 points by 0804 GMT,recovering from an 11-week closing low on Monday after a four-session losing run.

Utilities were among the gainers,with E.ON up 2.2 per cent after UBS added the company to its 8220;key call8221; list,saying the stock8217;s 20 per cent underperformance in 2011 was unwarranted.

The STOXX Europe 600 utilities index rose 0.8 per cent.

Mining shares were also among the heavyweight gainers,with the STOXX Europe 600 basic resources index up 0.8 per cent as copper prices steadied.

Across Europe,Britain8217;s FTSE 100,Germany8217;s DAX and France8217;s CAC 40 rose 0.2-0.5 per cent.

Greek shares lost 0.9 per cent with banks down 1.4 per cent as uncertainty remained over the resolution of the country8217;s debt crisis,with questions remaining over how much of a hit private bondholders may have to take.

Mediobanca analysts said Greek banks would face a capital shortfall of 8 billion euros if a 43 per cent haircut were applied to Greek bonds,although such a move seemed unlikely in the short term.

BERNANKE EYED

Caution was likely to persist after recent disappointing data from the United States,including weak labour market and manufacturing numbers,raised fears the pace of recovery in the world8217;s largest economy could be slowing.

Investors will closely monitor a speech by Federal Reserve chairman Ben Bernanke at 1945 GMT for clues on the US central bank8217;s view of the slowdown and its impact on loose monetary policy.

Credit Suisse strategists said in a note recent economic weakness was just a mid-cycle slowdown,and they favoured life insurance companies,arguing government bond yields would trade higher as the recovery strengthened.

Among life insurance companies,Credit Suisse likes AXA and Allianz,the strategists said.

They also like companies which can benefit from a rise in companies8217; capital expenditures. They highlighted software and advertising companies such as SAP and WPP.

However,Credit Suisse said it was too early to raise cyclicals,which have a strong correlation to the performance of the economy overall.

8220;We have not quite seen the normal perconditions for a mid-cycle trough in equities but we think we are getting close,with insider buying,risk appetite and marco surprises near the levels typically seen at market lows,8221; they said.