European shares get bank boost to fresh 2-yr peak

LONDON, March 5 (Reuters) - Gains in financial stocks helped lift a key European equity index to a fresh two-year high on Tuesday as monetary policy support from central banks continued to underpin investor sentiment.

The pan-European FTSEurofirst 300 index rose 0.8 percent to 1,178.12 points while the euro zone's blue-chip Euro STOXX 50 index advanced 1.1 percent to 2,649.09 points.

Bank and mining stocks, seen as the most sensitive to signs of an improvement in the global economy, were among the top gainers, with the STOXX Europe 600 Bank index rising 1.3 percent.

Berkeley Futures associate director Richard Griffiths said the main reason for the rise on European equity markets was a strong close on Monday to U.S. stock markets, buoyed by central banker comments around easy monetary policy.

"The U.S. market is propping up the world and it seems determined to hit those new highs," said Berkeley Futures associate director Richard Griffiths.

However, Griffiths added clients were selling "call" options - which bet on a future market rise - on the German DAX and Euro STOXX to get some protection in case the equity market rally petered out in the near term, with worries over Italy's political deadlock weighing on investors.

"Customers are happy to sell 'calls' on the DAX and the Euro STOXX. It's difficult to see the market rallying hugely from here. Any moves up from here will be sluggish," he said.