European shares head towards best week in eight months

Fri Dec 20, 2013 6:59am EST

* FTSEurofirst 300 up 0.2 pct
    * On track for biggest weekly gain since April
    * Carnival rallies as results prompt broker upgrades

    By Toni Vorobyova
    LONDON, Dec 20 (Reuters) - European equities edged higher on
Friday, staying on track for their best week in eight months as
Carnival cashed in on forecast-beating results and broad
sentiment was boosted by greater clarity on U.S. monetary
policy.
    The Federal Reserve this week trimmed monthly bond purchases
by $10 billion, sugar-coating the reduced stimulus with a signal
that interest rates were likely to stay ultra low for longer
than previously expected. 
    Although the taper came earlier than many had forecast,
markets had plenty of time to prepare for the move - first
flagged in May - and the Fed's decision removed the policy
uncertainty that had kept many investors on the sidelines.
    "It is still highly accommodative policy from the Fed," said
Ioan Smith, strategist at KCG. "People have adopted the attitude
that OK, they are tapering but it's probably more of a symbolic
gesture than anything else."
    With European equity investors already sitting on gains of
nearly 30 percent from the past two years, traders said many had
already closed their books for 2013, with few willing to gamble
their profits in the final days of the year.
    "It will be low volume, low volatility and going slightly
higher," said Peter Garnry, strategist at Saxo Bank. 
    The FTSEurofirst 300 rose 0.2 percent to 1,284.24 points
 by 1127 GMT. That takes its gains so far this week to
3.3 percent - on track for its biggest weekly rise since April.
    Carnival was one of the top risers, up 6.1 percent
and on track for its biggest one day gain in over two years,
after several brokers upgraded the cruise ship operator
following forecast-beating quarterly results the previous day.
    "We have been hoping that new CEO Arnold Donald could be a
change agent and it appears that CCL is making some positive
steps towards a business transformation. Additionally, following
a better than expected Q4 and 2014 guidance, now is the right
time to get onboard," analysts at Credit Suisse said in a note,
upgrading it to 'outperform' from 'neutral'. 
    Volumes on Carnival topped their 90-day daily average less
than halfway through the session, compared to around 57 percent
on the FTSEurofirst 300.
    The rally pushed Carnival shares to three-month highs,
breaking above technical resistance at the 200-day moving
average.
    The charts outlook also brightened for the broader market,
opening the door for more gains on EuroSTOXX 50 index of euro
zone blue-chips, last flat at 3,032.14 points.
    "Thursday's gains prompted a bullish crossover on the daily
MACD study, and with the broader uptrend remaining intact we see
strength extending in the coming year," said Chris Wright,
technical analyst at Informa Global Markets.
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