* FTSEurofirst 300 up 0.5 pct, Euro STOXX 50 down 0.4 pct
* Swiss equities catch up after holiday break
* Risk seen on the downside ahead of U.S. payrolls
* Retreat in euro currency signals potential stock pull-back
* Upgrade sparks short-covering on Alcatel-Lucent stock
By Blaise Robinson
PARIS, Jan 3 A leading pan-European share index
ended higher on Thursday, helped by rallying Swiss blue-chips
returning from a national holiday and by forecast-beating U.S.
private-sector jobs figures ahead of key payrolls data.
Switzerland's SMI benchmark surged 2.9 percent,
catching up with the European market rally on Wednesday sparked
by Washington's deal to avoid the so-called fiscal cliff, with
UBS up 4.1 percent and Roche up 3 percent.
The FTSEurofirst 300 index of top European shares
ended 0.5 percent higher at 1,162.56 points, its highest closing
level in nearly two years.
The euro zone's blue chip Euro STOXX 50 index,
however, lost 0.4 percent, to 2,701.22 points, with Germany's
DAX down 0.3 percent, France's CAC 40 down 0.3
percent and Spain's IBEX down 0.5 percent.
Euro zone stocks trimmed their losses after
better-than-expected private-sector jobs data - a day before
all-important payrolls figures for December - but the data
failed to spark a sustained broad-market rally.
"It means that people remain sceptical about tomorrow's
payrolls," Saxo Banque senior sales trader Alexandre Baradez
"It basically means two scenarios: a strong figure and
indexes hit new highs, or a sluggish figure which would trigger
a pull-back. A lot of investors are looking for a reason to book
Baradez said the drop in the euro currency, down 0.6
percent at $1.3108 against the dollar on Thursday, could signal
an imminent pull-back in European equities as the single
currency usually moves first.
The 30-day rolling correlation between the euro and the Euro
STOXX 50 index, which has been around 0.45 for most of December,
sharply dropped to 0.2 this week, the weakest correlation
between the two assets in 18 months.
The ADP National Employment Report showed on Thursday the
private sector added 215,000 jobs last month after increasing
their payrolls by 148,000 in November. The broader U.S. non-farm
payrolls data, due on Friday, is expected to show employers
added 150,000 jobs last month.
Swiss watch makers Richemont and Swatch
surged 5.7 percent and 6.4 percent respectively, outpacing the
SMI, boosted by strong watch sales figures from Hong Kong for
"The double-digit performance gives investors confidence to
believe in a better level of activity in Asia Pacific in 2013
versus 2012," a Paris-based trader said.
"It confirms the now well-accepted fact that the third
quarter seems to have been a trough in sales growth in 2012."
Telecom gear maker Alcatel Lucent surged 10
percent as a recommendation upgrade from Credit Suisse sparked
interest in the stock and prompted short sellers to further cut
their negative bets.
Hedge funds have been slashing their short-selling positions
on the stock in the past few weeks, Markit data showed. About 9
percent of Alcatel's shares are out on loan, down from a peak of
17 percent in mid-November.