* FTSEurofirst up 2.2 percent
* Europe's blue chip bounce off technical support
* China rate cut hopes help miners
* ECB douses sentiment surrounding fresh LTRO
By David Brett
LONDON, June 6 (Reuters) - Riskier banking and mining stocks
led a technical rally among Europe's top shares on Wednesday,
as hopes of central bank action to beef up the euro zone economy
remained despite the ECB resisting pressure to intervene in the
The FTSEurofirst rose 2.2 percent, or 21.09 points,
to close at 974.21, while Britain's FTSE, which is
heavily weighted towards mining and banking assets, jumped 2.4
percent and Germany's Dax added 2.1 percent.
The FTSEurofirst bounced off the 100 percent Fibonacci
retracement level of the LTRO rally which began in December,
while Germany's benchmark index rebounded from an "oversold"
position and London's blue chip index held within its tight
range between 5,250 and 5,400.
"We have got a volatile path up until the Greek elections
(on June 17), so I would not read too much into today's moves in
isolation given the falls we've had," said Paul Kavanagh, a
partner at Killik & Co.
"It feels to me (like a technical bounce) ... the big gains
have been in risk-on stocks but I do not think anything
fundamental has changed," Kavanagh said.
Basic resources stocks, up 5.2 percent, were the top
performers, with UK-listed miners, such as Kazakhmy
leading gainers as they were boosted by speculation of an
interest rate cut in China and caught up with a two-day market
rebound while UK markets were closed for a holiday.
Autos and parts makers, which rely on strong demand
in Asia, were up 2.1 percent, with tyre maker Continental
up 4.4 percent.
Rheinmetall surged 6.8 percent after Berenberg
Bank upgraded the stock to "buy" from "hold" on expectations the
German industrial group will win some significant defence orders
in 2012 and on valuation.
There were hopes of further stimulus from the United States
too as Atlanta Fed President Dennis Lockhart said the Federal
Reserve may need to consider further monetary easing if a wobbly
U.S. economy falters or Europe's crisis triggers a broader
European banks, which have the largest exposure to
the region's sovereign debt and economic woes, held in the
126-127 area, the sector's peak on May 22, against the backdrop
of German and European Union officials urgently exploring ways
to rescue Spain's debt-stricken banks.
There was some disappointment, however, as Europe's top
share index briefly pared gains in mid-afternoon, before
rallying in tandem with a strong U.S. open, after the European
Central Bank put the onus firmly on euro zone governments to
solve the bloc's debt crisis. That dashed expectations the
central bank could take near-term action despite saying the
currency area's economy was under increasing threat.
"We are building up to some kind of intervention but the ECB
remains very wary of taking any action before the Greek
elections," Keith Wade, chief economist and strategist at
Wade said the current uncertainty in Europe has seen
Schroders opt for a more defensive equity strategy focusing on
high-quality names and avoiding peripheral Europe.
Strategists at JPMorgan Cazenove said: "... unless we see a
meaningful policy announcement, we still think the trend remains
down," and he expected further downside to euro dataflow.
The strategists called for an "overweight" stance on
defensives such as telecoms and an "underweight" on cyclical
On the downside, UK-listed mobile telecoms firm Vodafone
shed 2.7 percent as the market heavyweight's stock
traded without the entitlement to its latest dividend.
Dutch supermarket Ahold, meanwhile, shed 4.2
percent after reporting weaker-than-expected earnings in the