Europe shares close higher

LONDON (Reuters) - European shares closed higher on Friday, with gains for most banks outweighing losses for defensives such as telecoms.

The FTSEurofirst 300 <.FTEU3> index of top European shares rose 0.5 percent to a provisional close of 839.44 points, having been up more than 1 percent earlier in the session.

Over the week, the index fell 3.1 percent, but is up 30 percent from the lifetime low it hit on March 9.

Governments and central banks worldwide are taking action to combat recession, and investors are becoming more confident they will be successful.

Data on Friday gave further cause for optimism. U.S. consumer confidence rose in early May to its strongest since the September failure of Lehman Brothers.

And U.S. industrial production fell 0.5 percent in April, dropping for the sixth consecutive month but at a more modest pace than in recent months, Federal Reserve data showed.

But analysts are sceptical about when, and how strongly, an economic recovery will come through.

"We've had a spectacular rally," said Philip Lawlor, chief portfolio strategist at Nomura. "Risk appetite has rebuilt. The question is about more green shoots."

"I don't think the data is actually going to turn positive for another six or nine months."

British bank Barclays <BARC.L> rose 5.8 percent after saying it was in talks to sell its prized asset management arm, Barclays Global Investors (BGI). The deal could be worth up to $10 billion (6.6 billion pounds), said sources.

Transformed financial group Fortis <FOR.BR> rose 12 percent after reporting a first-quarter net profit despite a negative impact on its investment portfolio, and saying inflows held up in April and early May.

Intesa Sanpaolo <ISP.MI> was up 7.4 percent after Cheuvreux upgraded the Italian bank to "outperform" from "underperform," while both Credit Suisse and Exane BNP Paribas raised their target prices.

Vodafone <VOD.L>, strong performer in recent days, fell 2.3 percent.

(Reporting by Brian Gorman)

Article Published: 15/05/2009