(by Dr. Goldfinger)

The FTSE 300 Eurotop index was 0.8 per cent higher at 964.36.

Insurance sector rallied strongly after taking a pasting last week as Swiss reinsurer Converium shocked the market with a profits warning and news of a $400m capital raising.

But the best individual performance in the FTSE Eurotop 300 winners table came from France's Peugeot, whose second quarter numbers were not as bad as some investors had feared. Peugeot shares settled an impressive 6.3 per cent higher €46.10 in as generally buoyant auto sector.

Other winners included Renault, whose shares put on 2.5 per cent to €61.20, Germany's DaimlerChrysler, up 2.4 per cent at €36.53 and BMW, whose shares finished 1.1 per cent ahead at €35.64.

Dealers said the rally in the reinsurers was possibly the most significant development of the day, as Converium shares shot higher  - closing 8.7 per cent up - after confirming there were no more horrors after the surprises of the previous week. The company announced second quarter losses of $660m, news which saw its shares surge ahead.

And other reinsurers, which also suffered in the wake of a slumping Converium stock price, pushed ahead as well.

Commenting on the Converium story and the forthcoming results season, Morgan Stanley said: "To say the last few days has been a difficult time for reinsurers is an understatement.

"We have been frustrated at the lack of explanatory detail and it seems that as we enter the results season investors have good reason to view the industry with a large degree of cynicism.

The broker's "best picks" in the sector are the "overweights" on Swiss Re and Hannover Re. Shares in the latter jumped 2.3 per cent to €26.29 while the former rose 2 per cent to SFr73.05.

Munich Re, the world's second-biggest reinsurer shared in the rally, its shares adding 3.5 per cent at €78.44. Zurich Financial Services, which floated Converium in 2001, and whose shares were among the worst affected by the deterioration in market sentiment last week, picked up 2.9 per cent at SFr176.75.

The banks sector showed Santander Central Hispano shares, which fell over 3 per cent on Monday in the wake of the details of its agreed bid for Abbey National, rallied 2.6 per cent to €7.99.

BBVA, Spain's second biggest bank, put on 2.5 per cent to €10.83, boosted by the well-received second quarter figures announced on Monday and an earnings upgrade issued by Morgan Stanley.