European shares were higher midday on Tuesday as a sharp fall in oil prices helped to ease inflation worries, boosting banking and airline stocks, reported reuters. At 1055 GMT, the FTSEurofirst 300 index of top European shares was 0.6 percent higher at 1,196.964, recovering from a day's low of 1,182.7, and down from a high of 1,201.57. Oil sank nearly $9.50 a barrel to around $106, hitting its lowest since early April, before recovering to $108. The initial signs are that a weakened Hurricane Gustav spared major oil facilities in the Gulf of Mexico. Airline stocks gained on the lower oil price, with Lufthansa up 4.5 percent, British Airways up 6 percent, and Air France KLM up 6.4 percent. Travel operators were also helped by the lower oil price, with Thomas Cook Group up 7 percent and Carnival up 4.2 percent. "Lower oil prices certainly help the market," said Mike Lenhoff, strategist at Brewin Dolphin. "Lower inflation will pave the way for cuts in interest rates. "Another thing that has helped is weaker sterling. It's come off 10 percent since July, and there are a lot of dollar earners in the FTSE 100, and they can pay out bigger dividends." Across Europe, Britain's FTSE rose 0.1 percent, Germany's DAX gained 1.4 percent, and France's CAC rose 1.2 percent. Asian stocks closed higher, and index futures indicated a strong opening on Wall Street. The FTSEurofirst 300 has fallen 20 percent so far this year, hammered by big losses at banks due to the global credit crisis, and the resultant slowing of the economy.
