* FTSEurofirst 300 up 0.4 percent
* Banks gain; UBS firm despite Libor probe fine
* Merck leads fallers on Stimuvax setback
By Tricia Wright
LONDON, Dec 19 European shares drifted higher on
Wednesday as expectations built that a budget deal in the United
States is close, though traders reckoned any positive outcome is
already in the price.
The FTSEurofirst 300 was up 0.4 percent, having hit
a fresh intra-day 18-month high of 1,141.80 after a slightly
better German business climate index for December.
The index added 0.4 percent on Tuesday.
"The market remains firm on continued budget hopes but the
bottom line is that 2012 is pretty much done and most people are
about to close their books for the year," said Lex van Dam,
hedge fund manager at Hampstead Capital, which manages around
$500 million of assets.
World stock markets hit 17-month highs on Wednesday on signs
of progress towards averting a "fiscal cliff" of growth-curbing
austerity measures and expectations of more aggressive monetary
stimulus from the Bank of Japan.
"Even if we do get a (U.S. budget) resolution in the next
few days -- and I still don't think it's a done deal; every time
they come out and say something positive there are caveats -- I
think it is largely in the price," Ian Williams, strategist at
Peel Hunt, said.
Banks were the top gainers, with the sector under
the spotlight after UBS agreed to a $1.5 billion fine
in order to settle charges of manipulating the Libor inter-bank
The penalty agreed with U.S., UK and Swiss regulators, the
second-largest fine paid by a bank, was in line with
expectations, and UBS shares rose 1.5 percent.
"I think the fines for Libor rigging have been priced in for
some time now," said Zahid Mahmood, senior dealer at London
"While they are substantial to say the least and they will
certainly impact a banking sector that has been under attack for
a while, I don't think they will have any material impact to
temper the broader rally we are undergoing due to the various
economic and political reasons, such as additional central bank
stimulus, broader signs showing global economic improvement."
Traded volume in UBS stood at 37 percent of the 90-day daily
average, against that for the FTSEurofirst 300 at 20 percent.
Merck KGaA topped the FTSEurofirst 300 fallers'
list, off 3.4 percent, after the company said its cancer vaccine
Stimuvax failed to meet a goal of improving survival in lung