U.S. data push Europe stocks to 9-mth closing high

European shares closed at their highest level in nine months on Monday as better-than-expected July U.S. manufacturing data boosted markets.

The pan-European FTSEurofirst 300 .FTEU3 index of top shares closed up 1.4 percent at 941.93 points after touching 947.01, the highest level since early November.

The Institute for Supply Management said its index of national factory activity rose to 48.9 in July from 44.8 in June. The median forecast of 72 economists surveyed by Reuters was for a reading of 46.2. [ID:nN03439889]

"The ISM data was certainly higher than the consensus numbers and was at the top end of the range. It is a good number; actually the significance of the 50 level being the cut off between expansion and contraction is overplayed," said Jim Wood-Smith, head of research at Williams de Broe.

"Numbers in the high 40s are normally consistent with GDP growth. It is confirmation, that at least for the time being, we have seen the worst of the recession," he said.

Banking stocks added the most points to the index. HSBC (HSBA.L) gained 4.9 percent after it reported a pretax profit above analysts forecasts. [ID:nL3661800]

Barclays (BARC.L) was 6.7 percent higher, rallying after an opening fall as the British bank posted first-half reported profits which Caznove said were "in line with consensus but arguably better underlying given larger than expected loss on fair value of own debt." [ID:nL3593368]

Among other banks UniCredit (CRDI.MI), BNP Paribas (BNPP.PA), Credit Suisse (CSGN.VX) and UBS (UBSN.VX) were up 0.1-2.7 percent.

COMMODS GAIN

Commodity stocks gained as crude CLc1 rose 2.8 percent and copper MCU3=LX rose 4.1 percent.

Energy stocks BG Group (BG.L), BP (BP.L) and Royal Dutch Shell (RDSa.L) were up 0.7-3.5 percent, while miners Antofagasta (ANTO.L), Eurasian Natural Resources Corporation (ENRC.L) and Xstrata (XTA.L) gained 5.3-7.1 percent.

"There seems to be no change to the optimistic mood at the moment. Rather than being concerned about the rally running out of steam, there is more a worry of missing the boat as the market powers ever higher," said Philip Gillett, a trader at IG Index.

The market also got a lift from positive figures. Purchasing managers' data showed British manufacturing activity grew last month for the first time since March 2008, benefiting from the fastest flow of new orders since November 2007. [ID:nL3668821]

And surveys showed Chinese factory growth accelerating in July, thanks to a revived domestic economy and slight pick-up in demand for its exports. The China purchasing managers index from brokerage CLSA hit a one-year high. [ID:nPEK360544]

Looking at the downside, defensive stocks weighed. Drugmakers took the most points off the index with Roche (ROG.VX) and Novartis (NOVN.VX) down 1.8 percent and 1 percent, respectively.

Across Europe, Britain's FTSE 100 .FTSE index closed at 4,682.46 points, its highest closing level since early October 2008. Earlier in the session, it hit a fresh intraday peak above the 4,700, its highest level since the collapse of Lehman Brothers in October 2008.

Germany's DAX .GDAXI was 1.8 percent higher and France's CAC 40 .FCHI was up 1.5 percent. (Additional reporting by Jon Hopkins; Atul Prakash; Editing by Rupert Winchester)