European shares aided by Italy political optimism

LONDON, April 22 Mon Apr 22, 2013 11:33am EDT

LONDON, April 22 (Reuters) - European shares inched higher on Monday as signs of progress to break political stalemate in Italy outweighed fresh downbeat earnings news and concern over the health of the global economy.

Milan's FTSE MIB index, up 1.5 percent, proved the regional outperformer for most of the day after the re-election of Italy's president following broad agreement among various political groups raised the prospect of an end to two months of stalemate after an inconclusive election.

The FTSEurofirst 300 provisionally closed up 0.1 percent at 1,154.68 points, having dropped 2.4 percent last week - its worst weekly loss since November - when lacklustre corporate earnings and signs of slowing growth dented equities.

The index had spent much of the session strongly in positive territory, at one point clawing back as much as 1 percent of last week's declines.

But much of these gains evaporated in late trade after the release of weaker than expected U.S. existing home sales data and as Caterpillar Inc., the world's largest maker of construction and mining equipment, cut its 2013 profit forecast.

While the broad backdrop remained cause for concern, strong measures taken by central banks globally to ease monetary policy persuaded some investors to keep an optimistic stance towards equity markets.

"When we're in an environment globally which is providing so much liquidity... it's very dangerous to bet against risk asset prices trending higher," Exane BNP Paribas's head of equity strategy, Ian Richards, said.

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