* FTSEurofirst 300 index rises 0.3 percent
* Index heads for biggest weekly gain in 1 month
* Basic resources stocks extend Thursday's gains
By Atul Prakash
LONDON, March 21 European shares headed for
their biggest weekly gain in a month on Friday, supported by a
rally in basic resources stocks and some positive technical
The European basic resources index rose 1.3 percent,
extending gains on expectations China would support its economy
after Premier Li Keqiang said on Thursday the world's top metals
consumer will speed up investment and construction plans to
ensure domestic demand expands at a stable rate.
Stronger miners, the biggest sectoral gainers, helped the
FTSEurofirst 300 to gain 0.3 percent to 1,309.39 points
by 1523 GMT after moving in and out of negative territory. The
index, which is about 3 percent below its 5-1/2-year high set in
January, has gained almost 2 percent this week.
"The market is consolidating at a very high level before we
push sharply higher. We need a catalyst and that might come from
the European Central Bank in the form of fresh policy
initiatives," Philippe Gijsels, head of research at BNP Paribas
Fortis Global Markets, said.
"The elements for the continuation of the current rally are
on the table. The market is not cheap but not extremely
expensive either and economic growth is going to be decent. If
you believe in the scenario of a gradual economic upturn, you
should play the sectors that benefit from that and invest in
stocks such as basic resources and banks."
The FTSEurofirst 300 gained nearly 20 percent since the
start of 2013 to a February peak and the medium term prospects
for European equity remained healthy, analysts said.
A Reuters poll on Thursday predicted European stocks will
extend their rally in 2014, fuelled by a long-awaited rebound in
corporate profits as the region's economy picks up and global
investors shift from emerging markets to Europe.
Stock markets across Europe were broadly positive, with
Britain's FTSE 100 index rising 0.4 percent, Germany's
DAX advancing 0.7 percent and the euro zone's blue chip
Euro STOXX 50 index gaining 0.6 percent.
Charts suggested the market's bias was on the upside in the
near term, but some strong resistance levels could limit gains.
"Stock prices are consolidating within a slowly rising trend
channel. The Euro STOXX 50 has broken the 50-day moving average
line today, suggesting some upside potential in the next few
days," Roelof-Jan van den Akker, senior technical analyst at ING
Commercial Banking, said.
"The first resistance is coming in at the falling trend
channel at around 3,154 and the upper end of this consolidation
pattern could be found at around 3,195, in line with a strong
horizontal resistance level on the weekly chart at 3,200."
Friday's gains come despite tensions over Crimea, with
European shares proving more resilient to anxieties over the
region than in the previous weeks.
Russia has annexed Crimea from Ukraine, a move condemned by
the West, but Moscow's assertion that no other Ukrainian region
would be subject to intervention helped stocks to move higher
Among individual sharp movers, Irish airline Ryanair
rose 2.7 percent after a spate of upbeat broker comment after an
update on its marketing overhaul and financing plans.
Europe bourses in 2014: link.reuters.com/pad95v
Asset performance in 2014: link.reuters.com/rav46v
Today's European research round-up
(Additional reporting by Alistair Smout; Editing by Ruth