March 20, 2015 / 5:30 PM / 5 years ago

European stocks extend rally backed by brisk investment inflows

* FTSEurofirst 300 up 0.8 pct, hits 2007 year highs

* Europe equities enjoy $42 bln of inflows in past 10 weeks

* Germany’s DAX up 23 percent so far in 2015

* Zodiac slides after profit warning

By Blaise Robinson

PARIS, March 20 (Reuters) - European stocks rallied on Friday, with euro zone shares easily outperforming again as global investors bet that a weaker euro would boost the region’s economy and corporate earnings.

Athens’ benchmark ATG index rose 2.9 percent after Greek Prime Minister Alexis Tsipras assured European Union creditors at late-night crisis talks in Brussels that his coalition would soon present a full set of economic reforms in order to unlock cash to stave off bankruptcy.

Outside the euro zone, Britain’s top share index FTSE 100 rose 0.9 percent and hit record highs, vaulting above the psychological level of 7,000 points for the first time in its history.

Bank of America-Merrill Lynch said European equity funds had seen $5.4 billion in investment inflows in the past week. That brought total inflows for the last 10 weeks to $42 billion, fuelled by expectations that the European Central Bank’s asset-buying scheme would revive growth.

The FTSEurofirst 300 index of top European shares ended 0.8 percent higher at 1,610.93, its highest closing level since mid-2007. Germany’s DAX rose 1.2 percent and Spain’s IBEX surged 3 percent.

The euro has fallen by about 25 percent against the dollar over the past year. This should give euro zone companies a major lift as roughly 50 percent of euro zone earnings come from outside the region.

Shares in SAP gained 1.5 percent after Europe’s largest software maker said it expects an 11-14 percentage point boost to its current-year operating profits following a further weakening in the euro against the U.S. dollar and other currencies.

The DAX, home to some of the euro zone’s biggest exporters, has surged 23 percent since the start of the year, strongly outpacing Wall Street where the S&P 500 is up 2.6 percent over the same period.

“Now that investors are reassured about the pace at which the Fed will normalise its monetary policy, this year’s positive trend on the market is set to continue. We will see further investment flows coming into Europe,” Barclays France director Franklin Pichard said.

Shares in Lafarge added 2.1 percent after the French company agreed with Holcim new terms on a planned merger that would create the world’s biggest cement firm. Shares in peer CRH, set to buy assets from Holcim and Lafarge, rose 5.6 percent, while Holcim gained 0.5 percent.

Bucking the trend, France’s Zodiac dropped 4.7 percent after the aerospace group issued a profit warning, citing a rise in costs.

Europe bourses in 2015:

Asset performance in 2015:

Today’s European research round-up (Editing by Mark Heinrich)

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