European shares hit one-week high

European shares hit a one-week closing high on Wednesday on better-than-expected US durable goods data and on hopes that the US Federal Reserve Chairman Ben Bernanke could signal on Friday further stimulus measures to help the economic recovery. Auto shares, which fell in the previous five weeks, were the top gainers on bargain hunting and on hopes that global demand for vehicles will revive. The sector index rose 4.7 percent, BMW gained 4.3 percent, while Volkswagen rose 4.1 percent.
The FTSEurofirst 300 index of top European shares gained for a third straight day and ended 1.4 percent stronger at 936.79 points, the highest close since August 17. But it is still down 13.4 percent this month and has fallen 16.5 percent in 2011 on concerns about the pace of global economic recovery.
However, sentiment improved on expectations that Bernanke's speech at the Fed's annual symposium in Jackson Hole might be a repeat of his performance last year when he hinted the central bank would act if conditions deteriorated. Two months later, the Fed began pumping $600 billion into the financial system through direct purchases of US Treasury debt.
The market also got a boost after figures showed new orders for long-lasting US manufactured goods surged in July on strong demand for transportation equipment. The figures gave some relief to investors who saw German business morale posting its steepest drop this month since the aftermath of the Lehman Brothers collapse in late 2008.
The eurozone's blue chip Euro STOXX 50 index rose for a third straight session and was up 1.8 percent at 2,238.70 point. Chartists said it faced resistance at 2,246, its 23.6 percent retracement from a fall between July 22 and August 11. "Technically, the rebound does not look convincing as the price stays below 2,246. It might be considered as a technical correction before the markets get more clues on Friday," said Dmytro Bondar, technical analyst at RBS.
Across Europe, Britain's FTSE 100 rose 1.5 percent, Germany's DAX gained 2.7 percent and France's CAC 40 climbed 1.8 percent. However, Greece's share benchmark fell 2 percent after hitting its lowest level in nearly 15 years, as an escalating row over demands by Finland for collateral on Greek loans was seen complicating implementation of its rescue package. Greek banks fell 2.4 percent, while Greek two-year government bond yields rose to their highest since the launch of the euro in 1999.