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Shares linked to commodities lead EU markets higher

European shares advanced on Friday on hopes that possible action on interest rates and mortgage insurance could help limit the damage to the global economy from problems in the US housing sector.

The UK FTSE-100 rose 1.5 percent to 6,303.30, the German DAX-30 gained 1.6 percent to 7,638.17 and the French CAC-40 gained 1.3 percent to 5,662.70.

They were led by companies with ties to the commodities sector, like steelmaker ArcelorMittal, mining giant Rio Tinto and oil producer Royal Dutch Shell. ArcelorMittal rose 2.8 percent, Rio Tinto gained 3.7 percent and Royal Dutch Shell added 1.4 percent.

US Federal Reserve Board Chairman Ben Bernanke said the central bank would be paying "particularly close attention to the timeliest indicators" to assess how the recent credit crisis and financial market turmoil is affecting the real economy.

Drew Matus, an economist at Lehman Brothers, said that the speech didn't commit to any rate action, but Bernanke showed the Fed wasn't "out of touch." Also, the Bush administration announced a plan to help stem mortgage defaults.

Shares in French luxury-goods firm PPR advanced 4.1 percent after saying that its first-half net income nearly tripled following strong performance from luxury brands Bottega Veneta, Yves Saint Laurent and YSL Beaute.

Millennium BCP shares added 3.9 percent on a Portuguese television report that its chief executive, Paulo Teixerira Pinto, has quit. He has been in a power struggle with the bank's chairman after the firm failed to take control of Banco BPI earlier this year.
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