* FTSEurofirst 300 gains 0.5 pct, up 5.3 pct in 2 weeks
* Europe stocks see record $17 bln in inflows year-to-date
* Italian shares steady as Renzi set to form government
* France's CAC 40 hits highest since November
By Blaise Robinson
PARIS, Feb 17 European stocks rose on Monday,
extending a brisk two-week rally fuelled by record inflows as an
increasing number of investors bet on the region's economic
Easing worries over emerging markets as well as data showing
brisk lending in China boosted shares in miners, with BHP
Billiton up 1.3 percent and Glencore Xstrata up
At 1130 GMT, the FTSEurofirst 300 index of top
European shares was up 0.5 percent at 1,338.67 points, a level
not seen in 3-1/2 weeks.
The benchmark index, which has surged 5.3 percent over the
past two weeks, is about 1.1 percent below a 5-1/2 year high hit
European equity funds have enjoyed net inflows of $17
billion since the beginning of 2014, according to the latest
data from EPFR Global, marking a record start to the year and in
sharp contrast to massive outflows from emerging market funds.
Within Europe, equity funds focused on Italy and Spain have
been leading the way in terms of inflows, EPFR said. Both
countries have recently seen their bond yields retreat sharply.
Italian 10-year government bond yields hit an
eight-year low of 3.622 percent on Monday, after ratings agency
Moody's lifted its outlook on the country's credit rating to
'stable' from 'negative' and as Rome prepared for a new
"Investors are quite sanguine about the economic and
political situation in peripheral Europe, and that's a very
positive signal," said David Thebault, head of quantitative
sales trading at Global Equities in Paris. "Ten-year bond yields
continue to fall across the board, a sign of stability which has
prompted a lot of investors to come back."
Italian shares were steady on Monday, with Milan's FTSE MIB
up 0.03 percent. The index outperformed on Friday,
rallying a 1.6 percent, as investors welcomed the prospect
centre-left leader Matteo Renzi will become prime minister.
Renzi said on Monday he will begin official consultations
to form a new government in the next 24 hours and expects to lay
out reforms to be completed within the next few months.
The MIB is up nearly 8 percent so far this year, trading at
a 2-1/2 year high and strongly outperforming a 1.6 percent rise
in the FTSEurofirst 300 in 2014.
In core European markets, the UK's FTSE 100 index
was up 1 percent, boosted by buoyant mining stocks, while
Germany's DAX index was up 0.1 percent.
Paris's CAC 40 was up 0.03 percent after hitting a
three-month high earlier in the session. The French benchmark
has been rising for 10 sessions in a row.
"The CAC is back at its year high, and even if there's a
need for a pause at some point after such a long winning streak,
it could easily break out on the upside in the next few weeks,"
Barclays France director Franklin Pichard said.
European shares have been supported by relatively good
corporate results in the current earnings season, with 58
percent of companies reporting in-line or better-than-expected
profits, according to Thomson Reuters Starmine.
While in absolute terms net profits are still falling, a
pick-up in corporate revenue, up 2.3 percent overall, and a
slight improvement in economic growth in the euro zone is
fuelling investors' hopes that earnings will pick up this year.
Bucking the trend on Monday, Bouygues slipped 0.8
percent after unveiling a 1.4 billion euro ($1.9 billion)
writedown on its investment in Alstom to reflect the
train and turbine maker's weaker cashflow forecasts.
ThyssenKrupp fell 1.5 percent. Traders pointed to
Citigroup's decision to cut its recommendation on the stock to
"sell" from "neutral", citing inflated valuations.
Shares in Neste Oil dropped 5.1 percent after
Nordea lowered its rating to "hold" from "buy," citing
uncertainty over U.S. policies on biodiesel, including volume
targets and tax credits.
Overall, trading volumes were expected to be thin in Europe
on Monday as Wall Street will be closed for a public holiday.
Europe bourses in 2014:
Asset performance in 2014:
Today's European research round-up