Better economic picture pushes European shares higher
* FTSEurofirst 300 rises 0.4 pct in choppy trade
* Index heads for weekly loss after 3 weeks of gains
* Cyclicals stocks outright winners; commodities up
By Atul Prakash
LONDON, Aug 23 (Reuters) - A rally in commodity and financial shares on the improving economic outlook helped European stocks to gain on Friday, although the market was still headed for this month's first weekly loss on concerns of a cut in U.S. stimulus.
Thin volumes due to the holiday season and comments from the U.S. Federal Reserve members kept the market choppy throughout the day, with the FTSEurofirst up 0.4 percent at 1,223.62 points by 1440 GMT after trading in a 1,214.28-1,226.26 range. Volumes were just half of the 90-day daily average.
But the index, down 0.6 percent this week, headed for its first weekly loss since late last month on lingering concerns that the U.S. central bank could start trimming its liquidity support as early as next month, and Friday's comments from Fed officials failed to provide any clearer direction.
Atlanta Fed President Dennis Lockhart said he would back a cut in asset purchases by next month if data between now and then showed a "sustainable picture" for growth, while San Francisco Fed President John Williams said it would be wise to start the move "later this year".
"It wouldn't surprise me at all to see the Fed start to reduce bond purchases in September. But I am not convinced that this is going to be a huge hurdle for equity markets to get through," Ian Richards, global head of equities strategy at Exane BNP Paribas, said.
He said that European shares were likely to go higher in September, when more investors were back from their holidays, as the Chinese economy was showing signs of stabilisation, European equities were still looking very attractively valued and economic figures from Europe were encouraging.
Consumer morale in the euro zone jumped to its highest in two years, Germany enjoyed its fastest rate of economic expansion in more than a year in the second quarter, and Britain revised up its growth, data showed on Friday.
Better economic prospects helped cyclical shares, with energy, mining and financial shares among the top gainers. The STOXX Europe 600 oil and gas index, up 1 percent, was the top sectoral gainer, while insurers rose 0.7 percent and basic resources stocks gained 0.8 percent.
Britain's commodity-heavy FTSE 100 index rose 0.8 percent to 6,496.85 points to outperform the broader market following the GDP data and a rally in miners on stronger metals.
"Macro momentum in the UK is one of strongest in any of the major developed countries right now," said Nick Nelson, global equity strategist at UBS, who expected the FTSE to end the year at 7,000 and the STOXX Europe 600 index at 325 points. The STOXX index was up 0.4 percent at 304.61.
Among individual movers, Commerzbank rose 2.5 percent after a report suggested the German government could sell its 17 percent stake in the struggling bank to another European lender.
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