(Reuters) - European shares saw their strongest gains in a week on Tuesday after a pick-up in German economic sentiment data bolstered hopes the region's biggest economy would rebound quickly from its recent weakness. Wall Street was expected to return from a three-day weekend with further gains, as it looks to build on the seven straight weeks of rises that have pushed the S&P 500 to a five-year high. Following last week's GDP figures showing that the euro zone saw a weaker end to 2012 than expected, Germany's ZEW survey of investors and analysts brightened the mood as it comfortably beat expectations to hit its highest level since April 2010. "Financial market experts have made their peace with the weak fourth quarter of 2012," said ZEW president Wolfgang Franz after its headline figure jumped to 48.2 points from 31.5 in January. "In their opinion the German economy faces less of a headwind from the euro crisis than throughout the last months." European stock markets, which had lost around 1.5 percent since the end of January, extended early gains after the data to put them on track for their biggest advance in a week. The FTSEurofirst 300 had added 0.9 percent by 1330 GMT, led by a 1.5 gain on Paris's CAC-40 and 1.2 percent rises on Frankfurt's DAX, in Milan and in Madrid.

1. GLOBAL MARKETS-Shares rise as
Germany boosts recovery hopes
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2. European shares rise 0.9 percent after strong German data
* Yen firms as Japan plays down foreign bond buying plan
* Euro steady after Draghi says eyeing down draft on
inflation
By Marc Jones
LONDON, Feb 19 (Reuters) - European shares saw their
strongest gains in a week on Tuesday after a pick-up in German
economic sentiment data bolstered hopes the region's biggest
economy would rebound quickly from its recent weakness.
Wall Street was expected to return from a three-day weekend
with further gains, as it looks to build on the seven straight weeks of
rises that have pushed the S&P 500 to a five-year high.
Following last week's GDP figures showing that the euro zone saw a
weaker end to 2012 than expected, Germany's ZEW survey of investors
and analysts brightened the mood as it comfortably beat expectations
to hit its highest level since April 2010.
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3. "Financial market experts have made their peace with the weak fourth
quarter of 2012," said ZEW president Wolfgang Franz after its headline figure
jumped to 48.2 points from 31.5 in January. "In their opinion the German
economy faces less of a headwind from the euro crisis than throughout the
last months."
European stock markets, which had lost around 1.5 percent since the end
of January, extended early gains after the data to put them on track for
their biggest advance in a week.
The FTSEurofirst 300 had added 0.9 percent by 1330 GMT, led by a 1.5
gain on Paris's CAC-40 and 1.2 percent rises on Frankfurt's DAX, in Milan and
in Madrid.
"Even if the real economy only lives up to half the expectations, ... any
fears of a technical recession should turn out to have been unjustified," ING
economist Carsten Brzeski said of the German outlook following the ZEW
survey.
The euro also rose and German government bonds turned negative after
the figures, though both moves proved to be brief. The euro was little
changed at $1.3350 as afternoon trading gathered pace and benchmark
Bunds were back in positive territory at 142.82.
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4. European Central Bank President Mario Draghi's reiteration on Monday that the bank
would continue to monitor the euro's recent strength kept downward pressure on the
currency, as some took the comments as a hint that a rate cut could be on the cards.
Underscoring the drag Europe's economic sluggishness is creating, new figures showed car
firms had their weakest January since the records of the Association of European Carmakers
began in 1990, with sales dropping 8.5 percent.
"What most people are now waiting for is what the ECB meeting brings next month and
whether we get a rate cut," said Tobias Blattner at Daiwa Securities in London.
YEN FIRMS
Elsewhere in the currency market, the yen rose after Japanese ministers played down talk
of foreign-bond buying by the country's central bank, and sterling, another currency in the
spotlight, remained near a seven-month low. The yen has dropped 20 percent against the
dollar since mid-November, sparking talk of a "currency war", though Japan's expansive
policies, which have driven the fall, escaped direct criticism from G20 policymakers last week.
Finance Minister Taro Aso told a news conference that he was not considering foreign-bond
purchases as a part of monetary easing, while Economy Minister Akira Amari said Prime
Minister Shinzo Abe's comments to that effect on Monday simply referred to policy options
countries have in general.
Their comments sent the dollar down to 93.50 yen. The euro eased 0.5 percent to 124.86
yen, well below its peak since April 2010 of 127.71 yen touched on Feb. 6.
The pound hovered at $1.5460, inching up from Monday's low of $1.5438. But with Bank of
England minutes due on Wednesday, the recovery looked vulnerable to any further
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5. CONSOLIDATION MODE
MSCI's world equity index was slightly higher ahead of the restart of U.S. trading, though
markets have been falling for two weeks since a big run-up in January.
After Monday's day off, U.S. stock index futures pointed to a higher open on Wall Street,
with futures for the S&P 500 up 0.2 percent, Dow Jones futures up 0.1 percent and Nasdaq
100 futures up 0.2 percent.
The gradual improvement in the global economic environment has supported
commodities, though concerns about Italy's election this weekend and talks in Washington
over a package of budget cuts set to kick in on March 1 have helped limit gains.
Silvio Berlusconi, seen as a threat by some investors to Italy's fiscal reform programme if
he defies the polls and regains power, grabbed headlines again as he warned "some
countries" might have to leave the euro unless the ECB becomes a lender of last resort.
Oil prices were little changed at $117.46 a barrel as investors awaited the return of U.S.-
based traders and the release of U.S. oil inventory data on Wednesday and Thursday.
Platinum prices, meanwhile, rose to near $1,700 an ounce, closing back in on the $1,740
high hit earlier this month, when Anglo American Platinum shut all its operations in
South Africa after workers stayed away following violence at one of the mines on Monday.
Gold rose for a second straight session when traders in China, returning from a week-long
break, bought up the precious metal, having seen prices drop 3 percent in their absence.
Spot gold edged up 0.1 percent to $1,610.94 an ounce, just above the six-month low of
$1,598.04 hit late last week. Citigroup metals strategist David Wilson said: "There is a
general perception that things are getting better in China and in the United States, so the
argument would be, 'why would you hold gold?'"
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6. CONSOLIDATION MODE
MSCI's world equity index was slightly higher ahead of the restart of U.S. trading, though
markets have been falling for two weeks since a big run-up in January.
After Monday's day off, U.S. stock index futures pointed to a higher open on Wall Street,
with futures for the S&P 500 up 0.2 percent, Dow Jones futures up 0.1 percent and Nasdaq
100 futures up 0.2 percent.
The gradual improvement in the global economic environment has supported
commodities, though concerns about Italy's election this weekend and talks in Washington
over a package of budget cuts set to kick in on March 1 have helped limit gains.
Silvio Berlusconi, seen as a threat by some investors to Italy's fiscal reform programme if
he defies the polls and regains power, grabbed headlines again as he warned "some
countries" might have to leave the euro unless the ECB becomes a lender of last resort.
Oil prices were little changed at $117.46 a barrel as investors awaited the return of U.S.-
based traders and the release of U.S. oil inventory data on Wednesday and Thursday.
Platinum prices, meanwhile, rose to near $1,700 an ounce, closing back in on the $1,740
high hit earlier this month, when Anglo American Platinum shut all its operations in
South Africa after workers stayed away following violence at one of the mines on Monday.
Gold rose for a second straight session when traders in China, returning from a week-long
break, bought up the precious metal, having seen prices drop 3 percent in their absence.
Spot gold edged up 0.1 percent to $1,610.94 an ounce, just above the six-month low of
$1,598.04 hit late last week. Citigroup metals strategist David Wilson said: "There is a
general perception that things are getting better in China and in the United States, so the
argument would be, 'why would you hold gold?'"
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