European shares extend rally, buoyed by Spain

    * FTSEurofirst 300, Euro STOXX 50 rise 
    * Spain gets boost from Moody's 
    * German business morale rises in February, Ifo says 
    * Volkswagen, HSBC cap gains 
 
    By Joshua Franklin 
    LONDON, Feb 24 (Reuters) - Demand for Spanish equities 
helped European shares to extend their rally on Monday to 
six-year highs, but worse-than-expected results from HSBC 
   and a disappointing outlook from Volkswagen    
capped the gains. 
    Spanish stocks rose 0.9 percent after Moody's raised Spain's 
sovereign debt rating one notch to Baa2 with a "positive" 
outlook   . Sentiment was also lifted by data that 
showed German business morale rose in February to its highest 
level since July 2011   .  
    European stocks have risen sharply over the past 2 1/2 
weeks, with the CAC-40 hitting a 5 1/2-year high on Friday, 
boosted by hopes the region's economic growth and corporate 
profits will recover this year. 
    "The outlook for corporate earnings, helped first by exports 
and now by a recovery in domestic demand, is improving," said 
Ann Steele, European equity fund manager at Threadneedle 
Investments. "Consumer confidence on the continent is on the up, 
and countries that have been most prepared to undergo difficult 
reform are reaping benefits in terms of GDP growth." 
    At 1549 GMT, the pan-European FTSEurofirst 300    was 
up 0.3 percent at 1,347.70 points, which would be the highest 
closing price in almost six years. The euro zone's blue-chip 
Euro STOXX 50    index was up 0.5 percent at 3,146.36 
points. 
    British mobile operator Vodafone    rose 3 percent, 
helping the FTSEurofirst 300 index of top European shares to 
just short of the six-year highs it hit in January. Vodafone's 
shares have gained on the prospect of one of the largest capital 
returns in corporate history, after it sells its stake in U.S. 
mobile-phone company Verizon Wireless. 
    Slowing the rally, shares in HSBC fell 3.5 percent. Europe's 
largest bank posted results that fell short of expectations and 
warned of more volatility in emerging markets.   
    The drop was even sharper for Volkswagen, Germany's biggest 
blue-chip by market value. VW sank 7.4 percent after it issued a 
disappointing 2014 outlook and announced plans to buy out 
minority shareholders of Scania   , sending shares of the 
truck maker up 32 percent.        
    Worries brewing over credit restrictions on China's property 
sector also kept investors on edge. Chinese shares fell on 
Monday, knocked by news reports saying Chinese banks had begun 
tightening property loans.    
    Mining shares, which have a big exposure to resource-hungry 
China, retreated, with Rio Tinto    down 1.8 percent and 
Anglo American    down 2.1 percent. 
    Around Europe, UK's FTSE 100 index    was down 0.1 
percent, lagging continental indexes. Germany's DAX    
gained 0.2 percent and France's CAC 40    rose 0.5 percent. 
    "The prospect of a pick-up in growth in the euro zone has 
been one of the big catalysts for the market in the past few 
weeks," FXCM analyst Vincent Ganne said. "With a lot of data 
coming out this week, including Friday's inflation figures, fund 
managers' risk appetite will be tested. We need more positive 
news, otherwise investors will start having doubts."    
     
     
    Europe bourses in 2014: http://link.reuters.com/pad95v 
    Asset performance in 2014: http://link.reuters.com/rav46v 
    Today's European research round-up  RCH/EUROPE  
 
 (Additional reporting by Christoph Steitz in Frankfurt and 
Blaise Robinson in Paris; Editing by Larry King) 
 ((joshua.franklin@thomsonreuters.com)(+44207 542 0331)(Reuters 
Messaging: joshua.franklin.thomsonreuters.com@reuters.net)) 
  
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