European shares hit two-month high; banks gain

LONDON, March 17 (Reuters) - European shares hit a two-month high on Wednesday, led by the banking sector, after the U.S. Federal Reserve pledged to keep interest rates near zero for an extended period.

By 0810 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.3 percent at 1,064.22 points after touching 1,065.90, the highest level since Jan. 20.

Banks featured among the biggest risers. Italy's biggest bank UniCredit gained 3.8 percent after it beat forecasts for 2009 net profit and returned to a cash dividend to shareholders.

Banco Santander, Barclays, BNP Paribas and Deutsche Bank rose 0.4 to 0.9 percent/

The Fed also sounded more upbeat about the job market and said inflation was likely to remain subdued as it held interbank overnight rates in a zero to 0.25 percent range.

'There was no new bad news so this is good. I think the market can continue its upward trend to the end of the quarter,' said Giuseppe-Guido Amato, strategist at Lang & Schwarz in Frankfurt.

Miners were in demand as copper edged 1.1 percent higher as the dollar held near a one-month low following the Fed move.

Anglo American, Antofagasta, BHP Billiton , Eurasian Natural Resources Corporation, Rio Tinto and Xstrata were up 0.5 to 1.5 percent.

(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.