European shares set to mark strongest year since 2009

Mon Dec 30, 2013 12:27pm EST

* FTSEurofirst 300 down 0.2 pct, Euro STOXX 50 down 0.3 pct

* Last full session of the year

* FTSEurofirst 300 set to gain 16 pct in 2013

* Euro zone's Euro STOXX 50 set to gain 18 pct in 2013

* Autos surge, miners tumble in 2013

By Blaise Robinson

PARIS, Dec 30 (Reuters) - European stock indexes stayed on track on Monday to post their biggest annual gains in four years after signs of economic recovery coupled with a long run of cheap central bank money prompted investors to scoop up shares.

The FTSEurofirst 300 index of top European shares ended its last full session of the year down 0.2 percent at 1,311.76 points in thin holiday trade, set to post a gain of around 16 percent for 2013, its best annual performance since 2009.

The euro zone's blue-chip Euro STOXX 50 index ended 0.3 percent lower at 3,100.93 points, poised to report a gain of 18 percent for the year, also its strongest since 2009.

Stock markets in London, Madrid, Paris, Amsterdam, Brussels and Lisbon will close around midday on Tuesday, while other major European markets including Italy, Germany and Switzerland will remain closed on Tuesday for the New Year holiday break.

"This year has seen the renaissance of equities as the financial crisis ended. Next year should see the end of the economic crisis, and it should bring more opportunities for stock investors," said David Thebault, head of quantitative sales trading at Global Equities in Paris.

European shares, which have enjoyed brisk investment inflows in the second half of this year, have rallied as investor worries over Spain and Italy abated, Europe's macroeconomic indicators improved, and the European Central Bank and the U.S. Federal Reserve provided massive liquidity.

Earlier this month, the Fed announced that it would slightly trim its unprecedented monetary easing programme, but investors took heart in stronger U.S. economic data and a commitment from the Fed to keep interest rates low for longer.

Among European sectors, the STOXX auto sector, home of companies such as Volkswagen and Renault, has been the best sector in 2013, up 38 percent. Telecoms and media also performed well, both up about 33 percent on the year, boosted by a wave of M&A deals.

Bucking the trend, the basic resources sector, including mining groups Rio Tinto and BHP Billiton , took a beating during the year, tumbling 14 percent as metal prices fell, including gold and copper.

Around Europe on Monday, UK's FTSE 100 index ended down 0.3 percent, France's CAC 40 down 0.05 percent, while Spain's IBEX gained 0.02 percent and Italy's FTSE MIB rose 0.06 percent.

Germany's DAX, which closed for the year at 1300 GMT on Monday and will remain closed on Tuesday and Wednesday for the New Year break, ended the day down 0.4 percent after hitting a record high of 9,594.35 points in morning trade.

The country's blue-chip index - home of bellwethers such as Siemens and Deutsche Bank - finished the year with a gain of 26 percent, outpacing pan-European indexes, as investors favoured shares from the region's biggest economy.

Despite the positive sentiment following the year-end rally in European equities, IG France Chief Market Strategist Alexandre Baradez warned of the risk of a correction in the first quarter of 2014.

"All the positive catalysts have been priced in already, and the level of euphoria on the market is quite high, which is not a good sign," he said.

"We're in for a serious correction in the next few months, which should shake up things a little bit and bring good buying opportunities."

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