European shares inch towards multi-year high after Fed minutes

Thu Apr 10, 2014 4:23am EDT

* FTSEurofirst 300 up 0.4 pct, around 1 pct off near 6-year high

* Investors respond to dovish signs from Fed minutes

* LVMH surges on fashion and leather division beat

* Weak China trade data could limit market gains

By Tricia Wright

LONDON, April 10 (Reuters) - European shares rose on Thursday after minutes of the U.S. Federal Reserve's latest policy meeting suggested the central bank would be less inclined than anticipated to raise interest rates.

LVMH surged 3.9 percent, the top blue-chip gainer across Europe, after the world's biggest luxury group said sales at its fashion and leather division rose 9 percent, beating analysts' expectations.

Peers Kering - which owns Gucci - and Christian Dior rode on its coattails, advancing 3.5 percent and 3.3 percent respectively, the second and third top risers.

Trading volume in LVMH was robust, at around three quarters of its 90-day daily average, against the FTSEurofirst 300 on almost a fifth of its average.

The Fed minutes had fuelled a rally on Wall Street and weighed on the dollar. The market pushed out expectations of a first Fed rate hike by about six weeks, to July 2015, trading in interest-rate futures showed.

"This does continue to make me believe that equities are the best play in town," said Lex van Dam, hedge fund manager at Hampstead Capital.

The FTSEurofirst 300 was up 0.4 percent at 1,343.63 points by 0757 GMT, building on a 0.4 percent rise on Wednesday when concerns about valuations, which triggered a steep sell-off earlier in the week, started to ease.

The gains leave the index around 1 percent off near six-year highs hit on Friday. The Euro STOXX 50 was up 0.3 percent at 3,191.38 points. It is just 1.5 percent below 5-1/2 year highs reached on Friday.

The STOXX 50 has found strong support over the last couple of days just beneath 3,180, a previous level of resistance.

Alpari analyst Craig Erlam said this suggests that the pull-back seen earlier this week "was just a shallow correction and the uptrend will resume", though added that Friday's high of 3,239 will need to be broken in order to confirm this.

Above this, he targets 3,277, followed by 3,329.

Any market advance, however, could be limited by data showing China's exports unexpectedly fell for the second straight month in March and import growth dropped sharply, adding to worries about slowing growth in the world's second-largest economy.

"My biggest concern remains China and that's really borne out by this morning's trade data... that's raising expectations that China will go further with its stimulus package, but I'm not sure how much room they've got to do that," CMC Markets senior market analyst Michael Hewson said.

Europe bourses in 2014: link.reuters.com/pap87v

Asset performance in 2014: link.reuters.com/gap87v

Today's European research round-up (Additional reporting by Blaise Robinson; Editing by John Stonestreet)