European shares rise as banks gain; Fed eyed

LONDON, March 16 (Reuters) - European shares bounced back on Tuesday after slipping in the previous session, with financials advancing ahead of the outcome of the U.S. Federal Reserve's policy meeting later in the session.

At 0807 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.6 percent at 1,056.54 points.

Banks featured among the biggest risers. HSBC, Banco Santander, BNP Paribas and Societe Generale gained 0.9 to 1.2 percent.

'I imagine the Fed is going to report interest rates are going to stay low for an extended period. I don't think there will be any damage to the market,' said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

'The euro zone inflation figures will be worth watching as the trend has been pointing downwards.'

The U.S. Federal Reserve is expected to hold interest rates near zero at a meeting on Tuesday and renew its pledge to keep borrowing costs very low for a long time, but could note a brightening economic picture and hint at being closer to dropping the vow.

Investors awaited euro zone inflation numbers for February and the German ZEW figures for March, both due at 1000 GMT.

Energy stocks were higher. Royal Dutch Shell was up 0.9 percent after it said it expected cash flow from operations to increase by around 50 percent from 2009 to 2012 and aimed to grow its dividend in U.S. dollars over time.

(Reporting by Joanne Frearson) Keywords: MARKETS EUROPE STOCKS/OPEN ([e-mail]; [phone], Reuters Messaging:[e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.