* Major European indexes hit fresh highs
* Strong PMI numbers support equities
* Italian stocks outperform, banks rally
(Adds detail, updates prices at close)
By Kit Rees and Atul Prakash
LONDON, Jan 2 Major European equity indexes
climbed to new highs in thin trading on Monday, with strong
manufacturing reports from the region boosting sentiment on the
first trading day of 2017.
Italy's FTSE MIB index was up 1.7 percent at its
close, hitting its highest level since January 2016. Germany's
DAX rose 1 percent after reaching to its highest in
nearly 17 months, while France's CAC gained 0.4 percent
following a 13-month peak earlier in the day.
The euro zone's blue-chip Euro STOXX 50 index
was up 0.6 percent, the highest level since December 2015, with
a brighter macroeconomic picture helping the broader market. The
pan-European STOXX 600 rose 0.5 percent and held at
British and Swiss markets were closed.
IHS Markit's 2016 manufacturing Purchasing Managers' Index
for the euro zone registered 54.9 in December, its highest since
April 2011. That was well above both the 50 mark which separates
growth from contraction, and above November's 53.7.
German manufacturing growth reached its highest in almost
three years, driven by rising demand from Asia and the United
States. French manufacturing hit a 5-1/2 year high, and Italian
manufacturing activity grew at its fastest rate since June.
"It's nice to see some good economic numbers on the first
trading day of the ... year. It has improved sentiment and could
help the market to set new highs in the coming months," said
Koen De Leus, chief economist at BNP Paribas Fortis.
"However, the road ahead looks bumpy because of several
political risks in Europe. Overall, I am positive on European
stocks this year as valuations are quite attractive compared to
the United States and company margins are slowly improving,
helped as well by the cheap euro."
Italian shares were also boosted by a rally in the country's
lenders. The Italian banking index rose 2.3 percent,
supported by a 9.1 percent jump in Banco BPM on the
first day of trading for the newly merged bank.
Banco BPM said on Monday that the new lender, created after
a merger between Banco Popolare and BPM,
started with a share capital of 7.1 billion euros.
Other Italian banks were also up, with shares in UBI Banca
and Bper Banca up 4.9 percent and 4.2 percent
Trading was thin, with volumes at 35 percent for the CAC
index and 41.8 percent for the euro STOXX 50 of their 90-day
Britain's blue-chip FTSE 100 index closed 2016 at a
record high on Friday after clocking a yearly gain of 14.4
percent, the best performer among major European stock indexes,
with a sharp decline in sterling after the vote to leave the EU
helping exporters and stronger metals prices boosting miners.
(Reporting by Kit Rees and Atul Prakash; Editing by Alison