European shares rise on Greek deal, US data

European shares rise on Greek deal, US data

* FTSEurofirst 300 index up 0.4 percent

* Pares gains on Italian banks

* European shares undervalued vs U.S. - fund manager

By Harro ten Wolde

FRANKFURT, June 24 (Reuters) - European shares edged higher on Friday, boosted by indebted Greece's deal with international lenders and stronger-than-expected U.S. durable goods data.

European Union leaders promised more money to help Greece stave off looming bankruptcy late on Thursday, provided its parliament enacts an austerity plan.

Greek Prime Minister George Papandreou promised to push through radical reform after his new finance minister clinched agreement with The EU and IMF on tax rises and spending cuts to plug a $5.38 billion funding gap.

By 1235 GMT on Friday, the FTSEurofirst 300 index of top European shares was up 0.4 percent at 1,080.26 points after trading as high as 1,088.79 earlier, recovering from three-month closing lows a day earlier.

The index pared gains after shares in Italian banks UniCredit and Intesa Sanpaolo fell sharply and trading was suspended for hitting the daily downward limit as worries circulated about their capital positions and the euro zone debt problems.

"Although the Greek prime minister has won the vote of confidence, which means it is more likely that the austerity and privatisation measures required by the EU and IMF will be passed by parliament next week, there is still a high event risk," said Ulrich Wortberg, fixed-income analyst at Helaba.

The Thomson Reuters Peripheral Eurozone Banks index reversed a 2.3 percent gain and lost 1.3 percent.

European banks were the biggest decliners with a 1.2 percent loss after gaining more than 1 percent earlier.

UniCredit SpA fell 3.1 percent and Intesa Sanpaolo eased 1.2 percent.

SHORT-TERM BOUNCE

Rory Bateman, fund manager at Schroders, who oversees 8 billion euros ($11.32 billion) in assets, said he saw opportunities in the debt crisis.

"The Greek crisis has thrown up some very attractive valuations and opportunities in Europe relative to other equity markets in the world. Europe is now trading at a 25 percent discount to the United States," he said.

Bateman expected there would be some relief in stocks. "I am not talking about a 10 percent bounce if this goes through parliament next week. There will be less negative sentiment around Europe. That will evolve over next six months or so."

That view was supported by Bill McNamara, technical analyst at Charles Stanley, who noted that although the EuroStoxx 50 has clearly entered a highly volatile phase, the index is sufficiently oversold that a short-term bounce looks like a realistic expectation.

"The volatility also coincides with a test of the major lows that were reached on mid-March, at 2,717 and this level has become extremely important after all other apparent levels of support have been giving way."

In the United States, new orders for long-lasting manufactured goods rose more than expected in May as bookings for transportation equipment rebounded strongly, data showed on Friday, which could allay fears of a sharp slowdown in factory activity.