European shares buoyed by Swiss playing catch-up

Thu Jan 3, 2013 9:54am GMT

* FTSEurofirst 300 up 0.2 percent

* Swiss stocks top risers as Zurich reopens

* Miners hurt by profit-taking

* Next gains after trading update

By Tricia Wright

LONDON, Jan 3 (Reuters) - European shares rose on Thursday, kept afloat largely by Swiss stocks playing catch-up with the FTSEurofirst 300 which hit 20-month highs in the previous session, as the Zurich stock exchange reopened after a holiday.

The FTSEurofirst 300 was 0.2 percent firmer at 1,159.15 by 0933 GMT, having jumped 2.1 percent the previous session on relief over a last-minute deal in the United States to prevent huge tax hikes and spending cuts that could have pushed the world's largest economy into recession.

"In the short term I think there is not too much bad news coming out; I think most of the hurdles ... like the fiscal cliff have been cleared so I think the markets will be fairly positive for the next couple of weeks," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.

The FTSEurofirst 300 leaders' board was made up solely of Swiss stocks, led by luxury goods group Richemont, which enjoyed a 5.3 percent advance.

Mining stocks ran into profit-taking, limiting the index's advance, having lurched 4.6 percent higher on Wednesday on the back of the U.S. deal alongside upbeat manufacturing data from top commodities consumer China.

Next was a good gainer on Thursday, up 2 percent after the British retailer nudged up its full-year profit forecast.

Next kicked off the post Christmas UK retail reporting season by saying it expected a year to end-Jan. 2013 pretax profit of 611-625 million pounds against previous guidance of 590-620 million pounds.

"Next is highly cash generative, tightly run and looks to continue to execute on the basics of giving the consumer great product and capitalising on its leading multi-channel position. However, the sector has performed strongly over the last year and sector rotation is likely to lead to a period of consolidation," Seymour Pierce said in a note.

Shares in Next rose around 38 percent last year compared to a 13.2 percent rise on the FTSEurofirst 300.

Among the laggards, Compass Group shed 1.6 percent, with traders citing the impact of a downgrade in rating by Espirito Santo Investment Bank.

The bank cut its stance on the British contract caterer to "neutral" from "buy", citing valuation grounds after a strong run in 2012, with its fair value target increased to 750 pence from 700 pence.

The euro zone's blue-chip Euro STOXX 50, meanwhile, shed 0.5 percent to 2,698.37, having moved into "overbought" territory on Wednesday when it climbed 2.9 percent leaving it vulnerable to a pullback.

Charts, however, pointed to further gains.

"The intra-day bias remains bullish. Indeed, prices have completed their pull-back and bounced off the former resistance threshold at 2,665 which should now act as a strong support," Nicolas Suiffet, a technical analyst at Trading Central, said.

"Intra-day oscillators are a bit overbought. A pause could shape ahead of a new up leg. Suggest buying the dip with... 2,711, 2,720 as next intra-day targets."

(Reporting by Tricia Wright/editing by Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)

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