European shares propped up by solid U.S. data

Fri Feb 1, 2013 5:36pm GMT

* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 up 0.2 pct
    * U.S. ISM, jobs figures add to run of solid data
    * IBEX underperforms as short-selling ban lifted

    By Toni Vorobyova
    LONDON, Feb 1 (Reuters) - European shares inched up on
Friday, as investors took advantage of the past two sessions'
losses to snap up equities more cheaply, reassured by a run of
solid data from China, Europe and the United States.
     An above-forecast reading on the U.S. manufacturing sector
from the Institute for Supply Management (ISM), coupled with
upward revisions to the previous two months' non-farm payrolls 
offered more proof of recovery in the world's biggest economy.
    That helped equities build on earlier gains after purchasing
managers' indexes pointed to stabilisation in the euro zone and
a mild recovery in China.  
    "Overall, it's been a strong set of data today," said Derry
Pickford, strategist at Ashburton. "The equity market rebounded
quite strongly once they saw the (payrolls) revisions data." 
    The pan-European FTSEurofirst 300 closed 0.3
percent higher at 1,168.08 points, clawing back some of the
retreat suffered in the previous two sessions and edging towards
a 2-year peak of 1,178.55 set earlier in the week.
    The EuroSTOXX 50 gauge of euro zone blue chips added 0.3
percent to 2,710.08 points after finding technical support at
the 30-day moving average just below 2,670 points.
    "Given the trauma that equities have been through in the
last few months, people want things to be positive. There are
hurdles ahead but people are just willing the markets to do
really well," said Neil Marsh, strategist at Newedge.
    "There is a gradual trend upwards and I don't see that
stopping at the moment."
    "Given the trauma that equities have been through in the
last few months, people want things to be positive. There are
hurdles ahead but people are just willing the markets to do
really well," said Neil Marsh, strategist at Newedge.
    "There is a gradual trend upwards and I don't see that
stopping at the moment."
    Among single stocks, UK telecoms group BT was a top
gainer, up 6.5 percent after posting a bigger-than-expected
quarterly profit as cost-cutting paid off. 
    On the downside, the euro zone banking sector was one of the
worst performers, down 0.6 percent after banks slowed
down repayments of crisis loans to the European Central Bank.
 
    Spain's Ibex also underperformed, shedding 1.6
percent after the  country's market regulator lifted its ban on
selling borrowed stocks and bonds. That suggested some investors
were betting on declines in Spanish stocks after a 23 percent
rally in the past month.    
   "There is a reasonable chance that tensions in the euro zone
could grow again over the next couple of months and there could
be a pull back (in equities)," said Ashburton's Pickford.
    "We don't want to be too aggressively overweight at these
levels given that Europe has done very well in the last six
months. But, in the longer term, valuations are still incredibly
attractive."
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