* FTSEurofirst 300 up 0.9 percent
* Cyclical miners, autos lead market higher
* European stock 'fear gauge' drops 7.6 pct
* Burberry drops 7.6 pct after CEO leaves
By Tricia Wright
LONDON, Oct 15 European shares rose on Tuesday,
with some benchmark indexes hitting multi-year highs, bolstered
by indications that a deal could soon be clinched in Washington
to avert a debt default.
The FTSEurofirst 300 ended up 0.9 percent at
1,263.25 points, its highest close since Sept. 19, led by miners
and autos as investors bought into cyclical
The blue-chip Euro STOXX 50 index also climbed
0.9 percent to 3,004.56 points, hitting a fresh 2-1/2 year high,
while France's CAC 40 rose 0.8 percent to a 5-year high
and Germany's DAX was up 0.9 percent, at a record high.
Talks on Monday between Democrat and Republican Senate
leaders fuelled hopes of an imminent deal to reopen shuttered
U.S. federal agencies and prevent a default on federal debt.
Republicans also hope to pass their own version of
legislation to reopen the federal government, it emerged on
The Euro STOXX 50 Volatility index, or VSTOXX,
reversed Monday's gains, down 7.6 percent, signalling a sharp
rise in demand for risk.
"It's a risk-on day. The market's anticipating a resolution
to the gridlock in the U.S. and equities have responded
accordingly," Neil Veitch, investment director at SVM Asset
In the derivatives market, the Euro STOXX 50 put/call ratio
fell back to 1.2, from a four-year high of 3.9 hit two weeks
ago. The widely-used European gauge of investor sentiment
measures the trading volume of put options versus call options
on the Euro STOXX 50.
A ratio below 1 signals bullishness, while a ratio above 1.5
usually signals that investors are turning cautious, buying
'puts' as a hedge for their equity portfolios in case of a
"The sooner that we get to a resolution, depending on how
long-lasting that resolution is, then markets should quieten
down, but (there might not be) a big rally because we haven't
been seeing a significant amount of downside despite the
uncertainty," Henk Potts, market strategist at Barclays, said.
SVM's Veitch also saw little scope for stock markets to gain
much more in the event of a short-term fix.
"(What is) likely is that we'll get another 'kick the can
down the road' type of exercise, in which case given markets
have been robust it's unlikely that we'll see a significant
move," SVM's Veitch said.
"There's not a lot there to propel the market higher. The
early indications that we've seen out of the (third quarter)
earnings season... have not been wholly encouraging."
Swiss elevator manufacturer Schindler on Tuesday
became one of the latest European companies to issue a profit
warning, sending its shares down 5.9 percent.
Analysts have cut 2013 earnings estimates for the
pan-European STOXX 600 index by 3 percent since the
start of the third quarter. ()
UK luxury goods maker Burberry Group dropped 7.6
percent to its lowest levels since July following the departure
of long-standing boss Angela Ahrendts to Apple.