European shares gained ground Tuesday as investors bought into the beleaguered financial sector and welcomed stronger passenger figures from Air France-KLM and easyJet, according to AP. The U.K. FTSE 100 index closed up 1.9 percent to 6,308.80, the German DAX 30 index jumped 0.9 percent to 7,513.66 and the French CAC-40 index advanced 1.6 percent to 5,620.40. U.S. shares weakened slightly Tuesday ahead of a Federal Reserve monetary policy meeting. Most analysts expect the Fed to hold interest rates steady at 5.25 percent but add to its policy statement some wording about the troubles gripping the subprime-mortgage sector. Europe's financial sector gained, following a similar move in the U.S. stock market on Monday when stocks rallied to a sharply higher close, sending the Dow industrials up more than 280 points for its best day since 2003. On Tuesday, hedge fund manager Man Group rose 3.2 percent and property finance firm Hypo Real Estate increased 4.4 percent in the financial-services sector. Banks also performed well, with Deutsche Bank up 3.9 percent, BNP Paribas up 3.8 percent and Credit Suisse Group up 5.2 percent. Banks are cheap and worth buying at the moment, said Mike Lenhoff, chief strategist at stockbroker Brewin Dolphin. «A number of them sell on yields that we haven't seen for a very long time,» he said. Dresdner Kleinwort upgraded the European banking sector to overweight from neutral, highlighting Spanish banks Santander and BBVA as growth defensives and Commerzbank as an M&A play. Santander rose 2.7 percent, BBVA climbed 2 percent and Commerzbank rose 5.2 percent. Airline Air France-KLM rose 3.4 percent after it said it carried more than 7.2 million passengers in July, up 4.6 percent from the same point a year ago. The figures confirm a rebound noted in June, the company said. Budget airline easyJet advanced 6.4 percent after the number of passengers it carried in July rose 18 percent to 3.7 million. The company also reported that third-quarter revenue rose 5.7 percent after passengers carried increased 13 percent to 9.9 million in the quarter. Oil prices falling from recent highs also helped to support the sector. Shares in British Airways rose 4.2 percent and Deutsche Lufthansa shares advanced 2 percent. Bayer declined 1.9 percent after the German pharmaceutical and chemical company said net profit rose 46 percent in its second quarter, fueled by a gain from the sale of Wolff Walsrode group, but fell slightly short of analysts' expectations. Scottish & Newcastle rose 2.4 percent, turning around from earlier losses, after it became the latest British company to warn that recent poor weather has hurt its performance this summer. The brewer reported a 3 percent drop in first-half profit and warned it will struggle to meet performance targets after severe weather and a brewery strike.
