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European shares boosted by technology, banks

Published 12/09/2010, 05:47 AM
Updated 12/09/2010, 05:48 AM

* FTSEurofirst 300 index up 0.3 percent

* ASML jumps on Q4 bookings forecast

* Commods higher on global recovery hopes

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

LONDON, Dec 9 (Reuters) - European shares hit a 26-month high on Thursday on optimism U.S. tax cuts would boost consumption, with technology stocks boosted after ASML lifted its booking forecast.

By 1012 GMT, the pan-European FTSEurofirst 300 index of top shares was 0.3 percent higher at 1,122.96 points.

"Anything with good exposure to the U.S. is obviously going to have a huge benefit, especially on the consumer side," Ben Critchley, sales trader at IG Index, said.

Since President Barack Obama announced the tax cuts, top fund managers like Legg Mason Inc's Bill Miller, famous for beating the returns of the S&P 500 Index for 15 straight years, have been prompted to take a bullish stance on equities because of the stimulus the cuts will provide for the economy.

Technology stocks featured among the best performers, with Dutch chip equipment maker ASML jumping 6.4 percent after it raised its forecast for fourth-quarter bookings. The company has about 23.1 percent exposure to the United States.

The sector was also given a boost after microchip bellwether Texas Instruments Inc on Wednesday gave a solid outlook.

Elsewhere, German chemical company BASF and cement maker HeidelbergCement were 0.9 percent and 1.3 percent higher after Deutsche Bank both said the companies may benefit from the U.S. tax deal.

"The deal would allow all businesses to expense 100 percent of their investments in new plants and equipments in 2011," Deutsche Bank analysts said in a note.

BASF has 18.6 percent exposure to the United States, while HeidelbergCement's is 26 percent.

European stocks are looking cheaper than U.S. equities. The STOXX Europe 600 carries a one-year forward price-to-earnings of 9.9 times versus S&P 500's 12.7 times, according to Thomson Reuters Datastream.

However, S&P 500 has gained more than 10 percent so far this year, while the STOXX Europe 600 is up 8.7 percent.

BANKS GAIN

Banks which are sensitive to changes in the economic environment featured among the movers. Royal Bank of Scotland, Societe Generale and BNP Paribas rose 1.7 to 3.3 percent.

But on the downside, Standard Chartered lost 4.2 percent after it said rising costs in its Asian markets, took the shine off record income and profits. Later in the session, investors will watch the Bank of England rate decision, with the BoE expected to keep interest rates on hold at 0.5 percent.

Across Europe, the FTSE 100 index was up 0.2 percent, Germany's DAX was down 0.2 percent and France's CAC 40 was 0.2 percent higher. (Reporting by Joanne Frearson; Editing by Hans Peters)

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