European Factors to Watch-Shares head for best week in 8 months

LONDON Fri Dec 20, 2013 2:43am EST

LONDON Dec 20 (Reuters) - European shares were expected to open higher on Friday, with investors seen riding on a positive momentum after the previous session's strong rally following the Federal Reserve's move to only modestly cut stimulus measures.

Some investors could be tempted to take profits in the last trading days of the year after gains of about 3 percent for the pan-European FTSEurofirst 300 index this week, which is up by more than 13 percent this year, analysts said. The index was on track for its best weekly gain in eight months.

At 0737 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were 0.1 to 0.5 percent higher.

"With the big 'will they or won't they' FOMC meeting now behind us, markets are expected to be much quieter in the lead up to Christmas, with trading volumes significantly reduced and the economic calendar looking very thin," Capital Spreads wrote in a research note.

"Today is one of the four occasions in the year when we have a triple witching. This can create a surge in volatility, particularly towards the end of the day," it said, referring to the expiry of contracts for stock index futures, stock index options and stock options.

The FTSEurofirst 300 index rose 1.8 percent to 1,281.87 points on Thursday, its biggest one-day gain since September, after the Fed announced to phase out its stimulus plan more gently than many had expected.

Germany's DAX share index could outperform the wider market after data showed early on Friday that German consumer morale hit its highest level in nearly 6-1/2 years heading into January as shoppers became more willing to splash their cash.

In the overseas markets, Chinese stocks stumbled on concerns over a renewed cash crunch. China's benchmark money market rate climbed to a six-month high despite attempts by the central bank to calm sentiment, showing signs of a scramble for cash reminiscent of a massive crunch that occurred in June.

U.S. equities finished mostly flat on Thursday.

------------------------------------------------------------------------------- > Cash crunch fears hit China stocks, yen at 5-year low vs dollar > Dow inches up to record close on quiet trading day > Nikkei takes breather after Fed move; BOJ in focus > Bond prices fall a day after Fed announces $10 bln taper > Dollar buoyant as Fed taper lifts U.S. Treasury yields > Gold drops to 6-mth low on taper sell-off, could fall further > Copper bounces after 3-day retreat, smaller LME stocks help > Brent slips below $110, set for weekly rise

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