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Europe shares ease from 27-month high; SAS climbs

Published 12/23/2010, 12:51 PM
Updated 12/23/2010, 01:00 PM
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* FTSEurofirst 300 falls 0.1 percent

* UK FTSE 100 hits 6,000 mark for 1st time since June 2008

* SAS jumps on Lufthansa planned takeover report

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Dominic Lau

LONDON, Dec 23 (Reuters) - European shares on Thursday pulled back from a 27-month high touched earlier in thin pre-Christmas trade, though Britain's FTSE 100 <.FTSE> topped the 6,000-mark for the first time since June 2008.

Shares in Scandinavian carrier SAS , half owned by Denmark, Norway and Sweden, surged 14.5 percent on a report that Lufthansa planned a takeover. [ID:nLDE6BM0JO] SAS, Lufthansa, whose shares put on 0.3 percent, and the Swedish and Norwegian governments declined to coment.

Heavyweight miners were among the top sectoral losers, with the STOXX Europe 600 basic resources index <.SXPP> down 0.4 percent as copper fell from record high hit earlier this week on year-end book squaring.

The UK benchmark ended 0.2 percent higher at 5,996.07 points after reaching a high of 6,000.55 just before the close, boosted by energy stocks such as BP , which rose 1.4 percent.

The FTSEurofirst 300 <.FTEU3> closed 0.1 percent lower at 1,146.49 points, after three straight sessions of rise. Volumes were about 43 percent of the index's 90-day daily average.

A North Korean official saying his country was prepared to wage a "sacred war" against the South using its nuclear deterrent had no discernible impact on European equities.

"Expectations have improved a lot because we haven't had a double dip (recession), earnings are strong and the consensus for the economy next year will be strong," said Mark Bon, fund manager at Canada Life in London.

However, with the sovereign debt crisis in the background he didn't think people "are all-out bullish," Bon said, adding that the other concern was whether China would be successful in cooling its property market.

"There is still some anxiety but the anxiety is a lot less than it was last year and the market should do quite well next year," he said, adding that improving global growth favoured companies with international exposure. Equities have lately been buoyed by expectations of brighter economic outlook in the United States after further stimulus and continuing strong growth in China and India, while prospects of more M&A deals also offer support.

Denmark A.P. Moller-Maersk's agreement to buy oil assets in Brazil from South Korea's SK Energy <096770.KS> for $2.4 billion was among the latest in corporate activity. Maersk shares added 0.7 percent.

Rio Tinto offered $3.9 billion to buy African-focused coal miner Riversdale in an agreed deal that is likely to be challenged by rivals seeking to secure coking coal reserves [ID:nL3E6NM1LU]. Rio lost 1 percent.

The FTSEurofirst 300 is up 7.7 percent this month, on track for its best monthly percentage gain since July 2009, and has risen 9.9 percent so far this year.

BRIGHTER OUTLOOK

New U.S. claims for jobless benefits dipped last week and consumer spending rose for a fifth straight month in November, while new orders for U.S. made goods excluding transportation rose more than expected last month, to record their largest gain in eight months.

Across Europe, Germany's DAX <.GDAXI> eased 0.1 percent and France's CAC 40 <.FCHI> slipped 0.2 percent.

"The rally we've seen reflects the stronger growth expectations around the world," said Ronan Carr, European equity strategist at Morgan Stanley in London.

"Sentiment indicators have also rebounded. But the tug-of-war between this and the sovereign debt issues in Europe will continue to be a theme into the new year."

After the market close, Fitch Ratings cut Portugal's credit rating by one notch to A-plus, reflecting an even slower reduction in its current account deficit and a much more difficult financing environment for banking. [ID:nN23149674]

Danish drugmaker Novo Nordisk rose 3.2 percent after the company announced positive results from phase III trials with its new-generation insulin Degludec. [ID:nLDE6BM0ZG] (Additional reporting by Brian Gorman)

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