Saturday 25 October 2014

European shares set to post strongest year since 2009

Published 30/12/2013 | 08:28

An investor looks at the stock price monitor at a private securities company in Shanghai (AP)
An investor looks at the stock price monitor at a private securities company in Shanghai (AP)

EUROPEAN stock indexes stayed on track on Monday to post their biggest annual gains in four years after a long run of cheap central bank money and a strengthening economic recovery prompted investors to scoop up shares.

At noon, the FTSEurofirst 300 index of top European shares was down 0.2pc at 1,311.52 points, set to post a gain of 16pc for the year, its best annual performance since 2009.

The euro zone's blue-chip Euro STOXX 50 index was down 0.2pc at 3,103.32 points, poised to report a gain of 18pc for the year, also its strongest performance since 2009.

"This year has seen the renaissance of equities as the financial crisis ended. Next year should see the end of the economic crisis, and it should bring more opportunities for stock investors," said David Thebault, head of quantitative sales trading at Global Equities in Paris.

Around lunchtime today, UK's FTSE 100 index was down 0.2pc, Germany's DAX index down 0.1pc, and France's CAC 40 down 0.1pc.

The DAX has outperformed other regional benchmarks in 2013, rising 26pc and hitting a record high of 9,594.35 points on Monday.

European equities, which have enjoyed brisk investment inflows in the second part of the year, have rallied as investors' worries over Spain and Italy abated, Europe's macroeconomic indicators improved, and the European Central Bank and the U.S. Federal Reserve provided massive liquidity.

Earlier this month, the Fed announced that it would slightly trim its unprecedented monetary easing programme, but investors took heart in stronger U.S. economic data and a commitment from the Fed to keep interest rates low for longer.

"Even if the fundamentals aren't looking great yet, central banks remain easy (on policy) for the time being, despite (Fed tapering)," Gerard Lane, equity strategist at Shore Capital, said.

Among European sectors, the STOXX auto sector, home of BMW, Volkswagen and Renault, is set to post the best annual performance, up 38pc.

Bucking the trend, the STOXX basic resources sector, home of mining groups Rio Tinto and BHP Billiton , took a beating during the year, down 14pc, falling along with metal prices such as gold and copper.

 

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