* FTSEurofirst 300 up 0.5 pct, hits fresh 5-yr highs
* ArcelorMittal, BT, Generali results beat expectations
* Yen weakness seen hurting some exporters
By Toni Vorobyova
LONDON, May 10 European equities scaled fresh
five-year highs on Friday, bolstered by strong earnings numbers
from steelmaker ArcelorMittal and telecoms group BT and
expectations of continued central bank stimulus.
Investors looked to a meeting of Group of Seven finance
chiefs for reaffirmation of policymakers' commitment to economic
stimulus - the key driver of equities' 11-month long rally - and
for clues on possible further measures.
U.S. Federal Reserve Chairman Ben Bernanke is also expected
to leave the door open to further bond buying in a speech at
1330 GMT, after conflicting comments about the effectiveness of
such stimulus from some Fed officials this week.
The FTSEurofirst 300 index was up 0.5 percent at 1,234.86
points by 0944 GMT, testing levels not seen since June 2008
and getting a boost from fresh money as investors in
several European countries returned after a public holiday.
Underscoring investor optimism, Lipper data showed that
U.S.-based funds invested some $213 million of new money in
European equities in the week to May 8 - the strongest inflows
in nearly four months.
"You are just getting people dragged in, a lot of unwilling
buyers. The retail investors are jumping on the bandwagon, and
the institutional investors are under a lot of pressure. They
can't sit on high cash balances earning nothing forever if
everything is going up," said Stephen Walker, head of equities
research and market strategy at Ashcourt Rowan.
"It feels like it's going to end horribly at some point, but
it probably could keep going for some time."
He recommended switching from relatively expensive consumer
staples into more discretionary consumer stocks and focusing on
asset managers and insurers rather than banks.
Friday's gains were led by companies which posted
forecast-beating earnings, with the world's largest steel maker
ArcelorMittal jumping 6.3 percent and telecoms group
BT surging 11.7 percent to 5-1/2 year highs.
French carmaker Renault, meanwhile, rose 2.6
percent after its alliance partner Nissan posted a jump
in quarterly profits thanks to a weaker yen that boosted
the Japanese currency value of its foreign sales.
Analysts at BNP Paribas said that Renault presented an
attractive way to bet on more Nissan upside.
"Renault's auto business not being attributed any positive
value by the market," they said. "This implicit call option is
therefore being priced at a depressed value by the market and is
a cheap way of getting exposure to Nissan and dollar/yen..."
For other European companies, though, the weak yen - which
this week depreciated beyond the psychologically key 100 per
dollar level - is bad news, making exports less competitive.
"The yen weakness is a headwind for German exporters as they
might lose competitiveness. We also see some margin pressure in
Germany with rising wages, which could hurt these companies,"
said Emmanuel Cau, strategist at JP Morgan.