Italy leads European shares higher as govt is formed

Last Updated: Mon, Apr 29, 2013 15:40 hrs

LONDON, April 29 (Reuters) - European shares rose on Monday, boosted by the formation of a new, growth-focused government in Italy and by expectations of fresh stimulus from global central banks.

Italy's FTSE MIB index was the best performer in the region, rising 2.2 percent as investors welcomed the end of a two-month political impasse. New Prime Minister Enrico Letta promised to push for a change to Europe's focus on austerity and pursue growth.

The pan-European FTSEurofirst 300 index rose 0.5 percent to 1,202.61 points, helped by rising expectations of further monetary support from the U.S. Federal Reserve and the European Central Bank later this week after lower-than-expected inflation figures from the U.S. and Germany.

However, with the FTSEurofirst 300 is up 4.8 percent since April 18, some investors believe that any new central bank action is already in the price and scope for more gains is limited.

"It's a short term bounce we're seeing right now but after that we should prepare for some weakness given the structural problems that we are facing," said Wouter Sturkenboom, investment strategist at Russel Investments.

He expected a 10-15 percent pullback in European shares over the next few months.

More from Sify: