European shares hit 1,000 mark after 11 month gap

LONDON, Sept 16 - European shares rose 1.3 percent on Wednesday on growing signs of a global economic recovery, with the main FTSEurofirst 300 index closing above the 1,000 mark for the first time in more than 11 months.

The index, led by heavyweight banks and commodity stocks, unofficially closed up at 1,005.01 points, rising for the eighth session out of nine.

The index has rallied nearly 56 percent since hitting a floor in early March, but is still down 13.5 percent from its level in mid-September 2008 before the bankruptcy of Lehman Brothers.

U.S. industrial production rose for a second consecutive month in August, providing further evidence that the recovery was under way. The data came a day after U.S. Federal Reserve Chairman Ben Bernanke said the recession was probably over.

Banks, leverage plays for global recovery which have rallied 170 percent since March lows, were the top gainers in Europe on Wednesday. HSBC, Barclays, Commerzbank, Natixis, KBC Groep, UBS and Societe Generale rose 2.7-13.7 percent.

Commodity stocks, another beneficiary of a global economic recovery, were also in favour. Oil major BP put on 0.7 percent, while BHP Billiton advanced 3.2 percent.

"The real question is what happens when we pull away stimulus, which we will at some point. Short-term, we could still see strong momentum in the equity market," said Michala Marcussen, head of strategy and economic research at Societe Generale Asset Management.

"The valuations today are such that I feel that the markets are very much fully valued ... We need to think about where the momentum is going to come from. In the short term, economic news could continue to be quite favourable."

But she said the road to recovery would be bumpy as unemployment remained high and credit conditions stayed tight, and that a market correction would happen at some point.