European shares gain on hopes of U.S. plan revival

By Brian Gorman

LONDON (Reuters) - European shares rebounded on Tuesday as investors became more confident that a bailout plan for U.S. banks could be revived, and surprisingly strong U.S. consumer confidence data further boosted sentiment.

The FTSEurofirst 300 index .FTEU3 of top European shares ended 1.6 percent higher at 1,063.65 points.

Banks added most points to the index, with HSBC (HSBA.L) up 4.2 percent and Standard Chartered (STAN.L) jumping 8 percent.

Defensive drug stocks were also stronger, led by Sanofi-Aventis (SASY.PA) and Roche (ROG.VX), which rose 3.95 and 2.9 percent, respectively.

However, the benchmark index lost 11 percent this month, making it the second-worst month of the year after January, and it lost 11.5 percent in the third quarter, its fifth successive quarter of losses.

Across Europe, the FTSE .FTSE, Germany's DAX .DAXI and France's CAC-40 .FCHI were up 1.7, 0.4 and 2 percent respectively.

U.S. consumer confidence improved in September as inflation expectations fell to a six-month low, the Conference Board said on Tuesday, though it noted its survey did not capture all the latest events in the financial crisis.

"Yes, they were better than expected but (the readings) were taken before the crisis took full hold. People are still hoping for a revival of the bailout package," said Edmund Shing, strategist at BNP Paribas in Paris.