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European shares edge higher, tracking Asia gains

Published 12/29/2010, 04:46 AM
Updated 12/29/2010, 04:54 AM
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* FTSEurofirst 300 rises 0.1 percent

* Oils mostly higher as crude stays above $91

* Rio Tinto falls as output affected by rain in Australia

* For up-to-the-minute market news, click on

By Brian Gorman

LONDON, Dec 29 (Reuters) - European shares edged higher in early trade on Wednesday, tracking gains in Asia, with Total among the top gainers as oil prices hovered near their highest in more than two years.

At 0929 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,140.91 points, after rising 0.3 percent in the previous session. Volume was low, with some traders still on holiday.

The index has gained 6.9 percent in December, on course for its biggest monthly rise since March. The benchmark is up more than 76 percent from its lifetime low of March 2009, with several major economies having emerged from recession, helped by stimulus from governments and central banks worldwide.

"The one thing the market has got going for it is the U.S. economy regaining momentum. The Fed has got its foot to the floor in terms of monetary policy," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities, in London.

"At the moment the market doesn't want to know the bad news - and it's very reluctant to give up any ground whatsoever."

French heavyweight Total rose 1.1 percent, as oil stayed above $91 a barrel following recent cold temperatures. Other oils to gain included ENI, up 0.6 percent.

Although temperatures have picked up, a key U.S. report due on Wednesday was expected to show a decline in inventories. Crude prices were also supported by a weaker dollar.

Across Europe, Britain's FTSE 100 was flat, and Germany's DAX and France's CAC40 rose 0.2 and 0.3 percent respectively.

London shares were trading for the first time since Christmas, and to some extent were catching up with the decline on mainland Europe earlier in the week, partly due to China raising interest rates on Christmas day.

MINERS MIXED

However, London Metal Exchange copper still rose to a record high of $9,447 a tonne on Wednesday, with trade resuming after the Christmas break, during which U.S. futures rallied to a top fuelled by a weaker dollar and worries about supply from Chile. Miners were mixed. Rio Tinto fell 0.9 percent after declaring force majeure on some coal sales contracts due to heavy rains at collieries in Australia's Queensland state.

Randgold Resources rose 3.7 percent, having fallen heavily on Friday, after saying output was suffering.

Among other stocks, Lagardere rose 1.3 percent after the New York Post reported rumours that Meredith Corp is interested in buying its international magazine business.

Smith & Nephew fell 1.8 percent, after the U.S. Food and Drug Administration warned the British orthopaedic device maker that it failed to establish adequate manufacturing validation procedures for a hip replacement device.

China's stock market rebounded 0.7 percent in thin trading on Wednesday following a nearly 4 percent drop over the past two days, as investors started buying property and financial shares after tightening fears triggered by Saturday's interest rate rise pushed down valuations. (Editing by Jon Loades-Carter)

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