* FTSEurofirst 300 up 1.1 percent
* VSTOXX at level last seen mid-2007
* Miners firm, Rio Tinto leads
By Tricia Wright and Sudip Kar-Gupta
LONDON, Nov 29 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 ended up
1.1 percent at 1,121.83, while the euro zone's blue-chip Euro
STOXX 50 index gained 1.4 percent to 2,581.69
points, in its highest close since mid-September.
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.
"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 Thursday at around 7,400 points.
In a strong signal of growing appetite for equities, the
Euro STOXX 50 implied volatility index, or VSTOXX, hit a
more than five-year low on Thursday.
The VSTOXX, based on put and call options on Euro STOXX 50
stocks, fell to 16.49, a level not seen since mid-2007 in the
run-up to the U.S. subprime crisis which dragged the world into
its worst economic crisis since the Great Depression.
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 2.6 percent.
Rio Tinto rose 5.1 percent, the second-top
FTSEurofirst 300 riser. The global miner is aiming to axe $7
billion in costs over the next two years as it faces weaker
MORE CAUTIOUS APPROACH
Some investors, however, adopted a cautious approach,
expecting markets to be jostled around in coming weeks by
contrasting headlines concerning whether a budget deal can in
fact be clinched in Washington.
U.S. government debt prices turned higher on Thursday after
remarks from U.S. House of Representatives Speaker John Boehner,
which lowered hopes of a budget deal soon.
"I'm afraid I think it's going to be volatile. We're going
to have one day where it's all looking a bit better, the next
day it's all looking a bit worse, the next day it's all looking
a bit better, and the following day a bit worse," said Allianz
Global Investors' Neil Dwane.
"I think this will go right to the edge and maybe over it
because I think in the end there are in fact very little
incentives for people - both the Democrats and the Republicans -
to agree," said Dwane of Allianz Global Investors, which has
around 300 billion euros ($389.4 billion) assets under
Among fallers on Thursday, Kingfisher dropped 0.6
percent after the home improvements retailer said uncertainty
over the French government's budget plans had knocked consumer
confidence, and that it was hard to see when trading conditions
might improve in the UK.
Trading volume in Kingfisher was solid, at nearly twice its
90-day daily average.
"Anyone who's servicing domestic demand in Europe is finding
life very difficult right now," said Ben Ritchie, senior
investment manager at Aberdeen Asset Management, which has 187
billion pounds of assets under management.
"Where companies have offered guidance they have, broadly
speaking, I think disappointed the market with their outlook. I
think looking out to next year, it's going to be difficult."
Companies that Ritchie reckons can do well even in a
difficult macroeconomic environment include Swedish lock maker
Assa Abloy and British specialty chemical company