|Chennai||Rs. 28730.00 (1.13%)|
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* FTSEurofirst 300 rises 0.2 percent
* Euro STOXX 50 index gains 0.5 percent
* Improving sentiment over Spain lifting European equities
* Wartsila surges higher after raising outlook
By Sudip Kar-Gupta
LONDON, Oct 17 (Reuters) - European shares rose for a third consecutive session on Wednesday after Spain clung onto its top grade credit rating, bolstering expectations the euro debt crisis can be contained.
The FTSEurofirst 300 index rose 0.2 percent to 1,115.20 points by around midday, while the euro zone Euro STOXX 50 index advanced 0.5 percent to 2,560.89 points.
Spain remains under pressure to accept a sovereign bailout to help it deal with its debt burden.
Late on Tuesday, credit rating agency Moody's affirmed Spain's investment grade rating, assuaging widespread fears that Spain could be cut to 'junk' status, although it based its decision on the assumption that Madrid would ask for help in holding down its borrowing costs.
Although uncertainty remains over the timing of any Spanish request for a bailout, traders and investors said sentiment surrounding fixes to the euro zone debt crisis was improving.
"With so much focus on the toxic area of Europe, if we do get some signs of light at the end of the tunnel, we could be set for a better tone," said Richard Robinson, a European equities fund manager at British firm Ashburton.
Spain's IBEX stock market rose 1.5 percent as the Moody's decision pushed Spanish government bond yields down to their lowest level since early April.
Spanish banks Santander and BBVA were also among the stocks adding the most points to the FTSEurofirst 300 index, rising by 2.5 and 3.9 percent respectively.
Robinson said he had recently added Spanish bank Bankinter to his portfolio, along with Italian bank Intesa , on prospects of an improvement in the euro zone's economic problems which have also put pressure on Italy.
"Spain is in a better place for now," he said.
WARTSILA SOARS BUT DANONE SLIPS
The FTSEurofirst 300 index has slipped back by around 0.6 percent from a mid-September year high of 1,122.76 points over the last month.
However, it remains up by around 10 percent from late July, when European Central Bank head Mario Draghi pledged to do "whatever it takes" to protect the euro currency from the region's economic problems.
Finnish ship and power plant engine maker Wartsila was the best-performing FTSEurofirst 300 stock, rising 8.5 percent after it raised its full-year outlook.
However, French food group Danone dropped by 4 percent after reporting a slowdown in revenue growth at its main dairy division.
Danone also reported a further deterioration in business conditions across southern Europe, and some traders remained more cautious than others about Spain.
JN Financial investment manager Edward Smyth said he was taking out a "short" trade on Spain's IBEX, which bets on a further fall in the market, paired up with "long" trades betting on future rises in Germany's DAX and Britain's FTSE 100 .
"They've extended Spain's overdraft, but there are no systemic changes to the Spanish economy," he said.