* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.1 pct
* Euro zone, China PMI raise growth expectations
* Lower-than-expected LTRO repayment hits banking shares
By Francesco Canepa
LONDON, Feb 1 European shares inched up on
Friday, as upbeat factory data from the euro zone and China
raised expectations for a gradual recovery in the global economy
ahead of a major U.S. data release.
A survey of euro zone manufacturers showed they had their
best month in nearly a year in January, boosted by burgeoning
German output and offering signs the worst may be over for the
troubled currency bloc.
Two versions of China's PMI also showed factory output in
the world's largest consumer of metals rose in January, boosting
heavyweight basic resources stocks, which were up 0.4 percent.
They helped the FTSEurofirst 300 index of
pan-European shares rise 0.2 percent to 1,166.50 points and
created a positive backdrop for the traditionally influential
U.S. non-farm payrolls numbers at 1330 GMT.
"We're entering a synchronised period of economic strength,
which would be good for commodities and stocks and bad for
government bonds," Trevor Greetham, head of tactical asset
allocation and portfolio manager at Fidelity's Investment
Solutions Group, which manages $41 billion of assets.
Greetham was "overweight" equities and property, while he
was underweight bonds on expectations accommodative central bank
policies across the globe would continue to support economic
The FTSEurofirst 300 is up 14 percent since last July when
the European Central Bank's pledge to do all that was needed to
protect the euro began to drive down yields on Italian and
Spanish bonds and sent investors looking for the higher returns
UK telecoms group BT was the top riser as it reported
better-than-expected results, sending its shares 5.5 percent
higher in volume already above its full-day 90-day average.
Curbing gains was the euro zone banking sector,
which turned 0.7 percent lower after data showed lenders would
repay less-than-expected of emergency 3-year loans from the
European Central Bank next week.
Some cast the planned repayment of 3.5 billion euros as a
sign of caution after the banks paid a whopping 137 billion
euros back this week. But expectations for the second round of
payments had been low anyway, and the figures did not undermine
the message that banks may have healed faster than earlier
Still, Spanish lender BBVA offered a reminder of
the problems facing the sector, falling 1 percent after net
profit dropped 44 percent in 2012 due to big provisions against
soured property assets in its home market.
The country's Ibex underperformed, shedding 1.9
percent after the 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.
The broader euro zone Euro STOXX 50 index was up
0.1 percent at 2,705.22 points on Friday, taking its gains for
the year to 2.7 percent.
A surge of new money at the start of 2013 has underpinned
the stocks rally and trading volumes in European equities were
up 45 percent in January, also boosted by a spike in volatility
at the end of the month.
Thirty-minute charts showed the Euro STOXX 50 was poised for
further gains as it held above a key level at 2,696, a bottom
tested on January 22 and 24, as well as earlier on Friday,
according to Philippe Delabarre, an analyst at Trading Central.
But some longer-term investors had started to take profit on
European shares after a 28 percent rally since late July.
Wouter Sturkenboom, investment strategist at Russell
Investments, had tactically reduced his equity weighting to
slightly "underweight" while he was "overweight" cash, believing
the share price rally had taken valuations to levels that are
unattractive in the context of low economic growth.
Russel, which has $170 billion under management, expected
Friday's U.S. non-farm payrolls report to show 168,000 jobs were
added in January. A Reuters poll of analysts shows a consensus
Sturkenboom said a reading of more than 200,000 might lead
him to reconsider his view that U.S. growth is slowing, while
one of less than 100,000 would raise an alarm bell.