Rise in chemical stocks boosts European shares

Fri Dec 14, 2012 4:04am EST

* FTSEurofirst 300 up 0.1 pct to 1,136.06 points
    * Euro STOXX 50 up 0.1 pct to 2,631.24 points
    * Traders see equity markets inching up before end-2012
    * AkzoNobel surges on $1.1 bln unit sale plan

    By Sudip Kar-Gupta
    LONDON, Dec 14 (Reuters) - European shares edged up on
Friday, lifted by chemicals stocks, and many traders expected
equities to rise gradually before the year-end as the asset
class offers better returns than cash or government bonds.
    Traders added that prospects of an eventual deal in the
United States to avoid growth-curbing austerity measures, and
new signs of economic growth in China, were also boosting
sentiment towards equities.
    The pan-European FTSEurofirst 300 index inched up
by 0.1 percent to 1,136.06 points, recovering from a 0.4 percent
fall in the previous session and pushing the index back towards
an 18-month high of 1,141.32 points reached earlier this week.
    The euro zone's blue-chip Euro STOXX 50 index 
also rose 0.1 percent to 2,631.24 points, while Germany's
benchmark DAX advanced 0.3 percent to 7,607.73 points.
    Central Markets senior broker Joe Neighbour felt the DAX
index could end 2012 at around 7,700 points at the very least.
    "Every minor dip is bought up pretty quickly afterwards,"
said Neighbour. "I can't really see any big sell-off between now
and the end of the year. I expect the markets to continue to
grind higher."
    
    AKZO GIVES CHEMICALS HIGH
    The STOXX 600 European chemicals index was the
best-performing sector, rising 0.6 percent as Dutch group
AkzoNobel surged 5 percent on plans to a sell north
American unit to PPG Industries for $1.1 billion.
 
    Improved manufacturing data from China, where the HSBC flash
purchasing managers' index (PMI) for December rose to 50.9, also
offset lingering uncertainty over the outcome of budget talks to
avert a "fiscal cliff" in the United States. 
    The term refers to a combination of government spending cuts
and tax rises that could hit the U.S. economy next year, but
Tavira Securities head of trading Toby Campbell-Gray said
investors were still buying equities before the year-end.
    The global financial crisis and euro zone's sovereign debt
problems have led world central banks to slash interest rates to
record lows. This has hit the returns on cash and government
bonds, which offer less than equities' dividend payments.
    "Whether the equity market goes up, down or sideways, people
are still looking to buy it. We've got institutions coming in,
and they're net buyers, not sellers," said Campbell-Gray.
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