Europe shares rise on renewed hopes for U.S. debt deal

Reuters

* FTSEurofirst 300 up 0.5 pct, Euro STOXX 50 up 0.4 pct

* DAX hits record high, CAC 40 reaches 5-year high

* Burberry drops 5 pct after CEO leaves

* Nexans sinks 13 pct on profit warning, capital increase

By Blaise Robinson

PARIS, Oct 15 (Reuters) - European shares rose early onTuesday, gaining ground for the fourth session in a row, boostedby signs that a deal could soon be reached in Washington toavert a damaging debt default.

At 0726 GMT, the FTSEurofirst 300 index of top European shares was up 0.5 percent at 1,259.15 points, while theeuro zone's blue-chip Euro STOXX 50 index added 0.4percent to 2,988.35 points, hitting a fresh 2-1/2 year high.

Positive signals from talks on Monday between Democrat andRepublican Senate leaders fuelled hopes of an imminent deal toreopen shuttered U.S. federal agencies and prevent a default onfederal debt, sending world stocks higher.

"Relief that politicians have taken the U.S. to the edge andback again is clear," said Keith Bowman, equity analyst atHargreaves Lansdown.

The plan under discussion would end a partial governmentshutdown and raise the debt ceiling by enough to cover thenation's borrowing needs at least until mid-February 2014.

Around Europe, the UK's FTSE 100 index was up 0.6percent, France's CAC 40 was up 0.3 percent, reaching afive-year high, and Germany's DAX index was up 0.5percent, hitting a record high.

"The consensus is bullish, everyone believes that a dealwill be reached, so it could already be priced in," saidGuillaume Dumans, co-head of research firm 2Bremans.

"Deal or no deal, the size of the U.S. debt remains abyssal,and given the excess of optimism on the market right now, wecould get a pull-back."

Shares in UK luxury goods maker Burberry Group dropped 5 percent following the departure of long-standing bossAngela Ahrendts to Apple.

Casino rose 3.6 percent after the Frenchsupermarket chain said sales growth accelerated in the thirdquarter thanks to robust demand in Brazil.

French cable maker Nexans plummeted 13 percentafter slashing its profit outlook and unveiling a capitalincrease.

Investors will keep a close eye on U.S. corporate results onTuesday, with several major U.S. companies including Citigroup, Intel, Johnson & Johnson and Yahoo scheduled to report earnings.

On the macroeconomic front, focus will be on German ZEWeconomic sentiment indicator, seen at 49.6, at 0900 GMT.

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