European insurers face no major threat from the turmoil ensuing from last week's earthquake and tsunami in Japan, the European Union's insurance watchdog said on Thursday.

"From a European viewpoint, the impact is not severe, it is under control and there will be no problem for European insurers or for European insurance solvency," Carlos Montalvo, executive director of the European Insurance and Occupational Pensions Authority (EIOPA), told a committee of the European Parliament in comments monitored over the Internet.

"Most of this risk is localised by Japanese companies and by the Japanese government," Montalvo said.

Insurance shares rose, propelling the STOXX Europe 600 index up by 1.7 percent by 1106 GMT. 

EIOPA's crisis task force had swung into action after Friday's magnitude 9.0 earthquake to assess the exposure of Europe's reinsurers to earthquake, tsunami and fire risks, he said.
Regulators also looked at companies' holdings of Japanese equities, which plunged after the quake, as well as exposure to Japanese government debt, Montalvo said.

"We are monitoring and keeping track of it, and the exposure is not severe," Montalvo said.
Major reinsurers such as Munich Re and Hannover Re have said it is far too early to estimate damage claims from the earthquake, which by one estimate could cost insurers up to $35 billion, excluding effects of the tsunami. 

Insurance industry observers have been trying to establish whether damage payouts will be an "earnings event" for the industry -- hitting profit for the year -- or will be so large as to eat into the capital base of insurance companies.

The Japan earthquake and tsunami follow storms and flooding in Australia and an earthquake in New Zealand, which had already exhausted the budgets penciled in for natural catastrophe claims at Munich Re and Swiss Re, the world's two biggest reinsurers.

Insurance brokers said this week they expected damage claims would impact insurers' capital reserves, hurting them now but also possibly forcing them to raise prices for insurance in the years to come. 

Shares are still sharply down from one week ago, with the index down nearly 7 percent and major players Allianz down nearly 9 percent, Axa down 7.8 percent and Generali down nearly 7 percent.

Munich Re and Swiss Re shares have fallen by around 9 percent over the last week, with Hannover Re and France's Scor down by 6.4 percent and 5.3 percent, respectively.