European shares post highest close since July 2011

LONDON Thu Nov 29, 2012 4:36pm GMT

LONDON Nov 29 (Reuters) - A leading European share index hit its highest closing level since July 2011 on Thursday, led by mining stocks, on increased optimism that U.S. politicians would reach a deal to avoid growth-sapping austerity measures.

The pan-European FTSEurofirst 300 index provisionally closed up 1.1 percent at 1,121.32 points, while the euro zone's blue-chip Euro STOXX 50 index gained 1.3 percent to 2,579.85 points.

Equity markets were buoyed by comments from U.S. President Barack Obama that he hoped to reach a deal before Christmas to avoid the looming "fiscal cliff" of automatic tax hikes and spending cuts that could hit the U.S. economy.

Mining stocks, seen as among the most "risky" equity sectors since they are more sensitive than others to changes in economic sentiment, were the best performers. The STOXX Europe 600 Basic Resources index ended up 2.7 percent.

"It's all lining up quite nicely for a strong end to the year. It's still 'risk-on' for us," said MB Capital trading director Marcus Bullus, who said he was eyeing a breach of 7,475 points on Germany's DAX index as an important near-term positive signal. It stood late Thursday at around 7,400 points.

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