Citi lifts banks, Europe shares to higher close

LONDON, July 18 (Reuters) - European shares ended sharply higher on Friday after better-than-expected earnings from Citigroup (C.N: Quote, Profile, Research, Stock Buzz) spurred a rally among financials.

The FTSEurofirst 300 index .FTEU of top European shares provisionally closed 1.44 percent higher at 1,162.80 points, having fluctuated between 1,133.28 and 1,163.71 during the day.

The index gained around 3.2 percent during the week, but has lost about 23 percent so far this year.

Citigroup, the largest U.S. bank, posted a smaller than expected $2.5 billion loss, sending the DJStoxx European banks index 4.8 percent higher.

UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) jumped 7.6 percent and Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) soared 9.6 percent.

"Citigroup created a huge amount of positive excitement for the very reason that they are not as bad as expected and the markets gave them the benefit of the doubt," said Howard Wheeldon, senior strategist at BGC Partners.

(Reporting by Patrizia Kokot)