* FTSEurofirst 300 ends up 0.6 pct; gets U.S. GDP, jobless boostLONDON, Sept 29 (Reuters) - European shares rose on Thursday after better-than-expected U.S. economic data eased some market worries about slowing growth, prompting a reverse of early falls for a number of cyclical sectors and helping the index pare heavy third-quarter losses.
That weak broader trend is likely to remain into year-end for most markets, however, a Reuters poll showed, weighed by the headwind of tepid developed market growth and the tail risk of the euro zone sovereign debt crisis.
On that issue there was some brightness after the German parliament backed plans to boost the size and remit of the euro zone bailout fund, as agreed in July, providing a fillip for those keen to see signs of core euro zone political unity.
By the close, the FTSEurofirst 300 index of leading European shares was up 0.6 percent at 933.26 points.
It remains down 3.5 percent in September, ahead of Friday, the last trading day of the month and quarter, and on course for its biggest quarterly fall since the last three months of 2008.
Portfolio rebalancing at quarter-end was also lending some structural support to the market, a trader at a U.S. investment bank said, as people shifted some of their allocation to equities from bonds, after the heavy falls.
Better-than-expected weekly jobless claims data from the United States combined with a slight upwards revision for U.S. second-quarter growth helped buoy the market into the Wall Street open, although conviction was light and volume low.
Evidence of nagging concerns over the outlook for growth could be seen in the STOXX Europe 600 Basic Resources index , which fell 2 percent on Thursday.
It is on course for a seventh consecutive losing month, and September promises to be the heaviest fall in that sequence.
Key for Fredrik Nerbrand, global head of asset allocation at HSBC, was how the two broad macroeconomic themes play into one another.
"If we get a resolution on the euro zone, it would make me more confident. However, do I think this would spark a new era of growth? No. I think that's the big question here. It's a stop-gap, not a silver bullet to ignite global growth.
"A slowdown in growth is on the cards anyway so, if you remove the euro zone troubles, you remove the most apocalyptic of scenarios but you don't shift the overall growth outlook necessarily to the positive side, you merely limit the downside."
SENTIMENT BOOST
While news of the successful German vote had been expected by many -- with the euro and German Bund futures FGBLc1 little moved -- banks and insurers, among the most sold-off over the course of the debt crisis, got a sentiment boost.
French lenders, hit hard in recent months but up sharply this week on hopes for solid action to stem any potential Greek default contagion to bigger peripheral peers such as Italy, where many have deep links, were among the biggest gainers.
Societe Generale , up 5.8 percent, Natixis , 6.3 percent higher, and Credit Agricole , up 4.4 percent, featured prominently in a STOXX Europe 600 Banks index that closed up 2.5 percent.
Simon Maughan, head of sales at MF Global, said he expected a strong rally into year-end for financials on cheap valuations, "slow but positive moves afoot to address what's going on in Europe" and an expected sharp reduction in volatility.
"That's correlated with a powerful rally in financials every time it's happened since late 2007," he said.
Volatility, as measured by the Euro STOXX Volatility index , ended Thursday down 4.2 percent at 44.44. The lower the index the greater investor appetite for risk. In spite of the dip, the index remains at historically high levels.
Dan Morris, market strategist at JPMorgan Asset Management, said while European equity valuations were cheap, the broader macroeconomic risks were such that he would not go long without protection.
"I would be underweight a naked long position on European equities. I don't think you can just buy them and then cross your fingers.
"You can buy them on a long-enough horizon as long as you hedge that exposure a in way that, if things don't go well, you're not going to lose everything."
source:
http://www.reuters.com/article/2011/09/29/markets-europe-stocks-idUSL5E7KT23920110929
