* Deutsche debt buyback report soothes worries, shares up 13
pct
* Bank shares lead Europe stocks up after Asia falls
* Yen firms again vs dollar but off recent highs
* Market looks to Yellen for Fed rates guidance
* Oil rebounds, gold retreats from 7-1/2 month high
(Updates prices, adds quotes )
By Dhara Ranasinghe and Nigel Stephenson
LONDON, Feb 10 (Reuters) - European stocks rose on
Wednesday, rallying after losses in Asia, as concerns about the
health of banks that have hammered shares globally in recent
days eased and oil prices recovered from Tuesday's steep falls.
The more upbeat tone looked set to spill over into U.S.
trade, with index futures suggesting a positive open on Wall
Street ESc1 1YMc1 , and took the shine off safer assets such
as low-risk government debt and gold.
Investors and traders awaited Congressional testimony from
Federal Reserve Chair Janet Yellen for clues to the outlook for
monetary policy. Sharp falls in global stocks and weak U.S.
economic data have led markets to slash expectations for the
pace and extent of Fed interest rate rises to follow December's
first hike in nearly a decade.
The pan-European FTSEurofirst 300 index .FTEU3 rose 2.2
percent, with investors cheered by a Financial Times report that
Deutsche Bank DBKGn.DE was considering buying back several
billion euros of its debt.
Germany's flagship lender, whose shares have fallen almost
40 percent this year, rose more than 13 percent. The STOXX
Europe 600 banks index .SX7P was up 5 percent.
"The rebound in Deutsche Bank is helping to reassure some
investors who had been concerned about possible contagion in the
banking sector," said Francois Savary, chief investment officer
at Geneva-based Prime Partners.
Italian banks Intesa Sanpaolo (MI:ISP) ISP.MI> and UniCredit
CRDI.MI were both up more than 11 percent and Germany's
Commerzbank CBKG.DE added 9 percent.
The FTSEurofirst index has fallen for the last seven trading
days and on Tuesday hit its lowest since September 2013. It was
on track to post its biggest one day percentage gain in 1 1/2
weeks.
The big banks' fortunes are seen as closely linked with the
global growth outlook, which is faltering, while the adoption by
several major central banks of negative interest rates to help
lift growth has hit their business.
Those concerns have spread across the globe and on Wednesday
helped drive Tokyo's Nikkei index .N225 to its lowest since
2014. Mitsubishi UFJ Financial Group 8306.T fell 7.1 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 0.3 percent. Australian stocks .AXJO
touched a 2 1/2-year trough and closed down 1.2 percent.
Oil prices, which fell 8 percent on Tuesday, rose on the
prospect of OPEC and rival producers cooperating to tackle a
supply glut that has sent prices to a 12-year low. O/R
Brent crude LCOc1 , the international benchmark, rose 1.7
percent to $30.82 a barrel.
Rising stocks dulled the appeal of perceived "safe-haven"
assets, among which the yen has shone lately.
NEXT UP: YELLEN
The dollar languished close to a 3-1/2-month low against a
basket of currencies, as traders waited for U.S. interest rate
guidance from Fed chief Yellen.
The dollar index was flat at 96.143 .DXY , having touched
95.663 on Tuesday, its weakest since October.
The yen firmed against the dollar JPY= but was below a
15-month high hit on Tuesday. It last traded at 114.90 yen per
dollar. The euro was down 0.3 percent at $1.1258 EUR= .
Societe Generale (PA:SOGN) strategist Kit Juckes said Yellen would
have a fine line to walk when she delivers her testimony to
Congress, due at 1330 GMT.
"How do you sound soothing enough about the global market
environment and remain true to what you want -- which is raising
rates if the sun comes back out?," he said.
German 10-year government bond yields DE10YT=TWEB , another
safe haven, edged up 1.6 basis points to 0.25 percent.
Germany sold almost 4 billion euros of two-year bonds in a
sale that drew strong demand, helped by bets that the ECB may
cut rates by more than 10 basis points in March.
Ten-year Japanese government bonds JP10YTN=JBTC closed in
Tokyo yielding 0.005 percent, having hit a record low of -0.035
percent. The JGB yield went negative on Tuesday, following the
Bank of Japan's introduction of negative rates on Jan. 31.
Gold XAU= , another asset sought in times of trouble, edged
down from a 7-1/2- month high as European shares rallied. It was
last at $1,182.61 an ounce.