LONDON, July 29: European shares held their strong gains on Monday afternoon as insurers powered ahead and Wall Street opened higher, but analysts warned the advance may be just a technical bounce after last week’s intense selling.

Investors also have a heavy week of earnings reports to wade through, with key US economic data along the way too.

The FTSE Eurotop 300 index was up 3.6 per cent at 938 points, distancing itself from last week’s near-five year lows.

The move by two of the world’s biggest pension funds, Dutch PGGM and ABP, to stop lending securities to hedge funds to discourage them from short-selling stocks was helping bourses move higher, he said.

The key issue is not so much the actual funds involved, but the impact on sentiment. Hedge funds will be more reluctant to short the market if they can’t borrow stock, so it’s curtailing negativity in the market, McDonnell said.

Hedge funds have been blamed by some for the extreme volatility in the market and for accelerating its downward slide by selling shares in expectation they will fall further.

Insurers dominated the blue chip advancers as the sector, bombed out on worries over its solvency in the face of sliding stocks, rode the market bounce, with Germany’s Allianz up 7.4 per cent, while Dutch duo ING and Aegon gained more than six per cent.

Swiss Life jumped 14.6 per cent on rumours the insurer could be a takeover target.

The Euro Stoxx 50 index gained 3.6 per cent to 2,628 points.

Chartists said the Euro Stoxx 50 needed to break above 2,906 to enter a positive trend.

Telekom’s main rival in Germany, Britain’s Vodafone, reported stronger average revenue per user for its German operations for the three months to June.

Deutsche Telekom shares rose 3.2 per cent, helped by talk that Thomas Middelhoff, who departed suddenly at chief executive of Germany’s Bertelsmann media group at the weekend, would become the new CEO of Telekom, but a Telekom board member dismissed the speculation.

Vodafone shares were flat as the market focused on continued weakness in the group’s Japanese revenue figures and general doubts about the sustainability of subscriber growth.

Meanwhile, France Telecom rose 6.5 per cent after moving to sell its remaining stake in Franco-Italian chipmaker STMicroelectronics, helping to cut France Telecom’s debt. ST shares rose three per cent.

Fund managers said they were keeping a close eye on accounting news out of the United States ahead of an August 14 deadline for any US companies to restate earnings before their top officials become personally liable for errors.

A heavy week of US data kicks off on Tuesday with the consumer confidence and culminating with Friday’s July payrolls and personal consumption figures as investors look to see if economic recovery is flagging.—Reuters