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Euro stocks at best for weeks
LONDON, England (CNN) -- European shares closed at their best highs for weeks as investors continued to bet on a short war in Iraq and unloaded hedge trades, buoyed by reports of major U.S. and British military advances. Volatile technology and insurance stocks such as German chip maker Infineon and Dutch insurer ING -- Europe's biggest -- led the gainers as investors sought maximum exposure to a rally that has boosted regional indices by almost a fifth in less than two weeks. However, analysts voiced skepticism over the sustainability of any gains, recallling previous rallies that have petered out and warning of challenges still facing the global economy -- with or without war. "Most of the energy driving markets currently is the unwinding of speculative 'disaster' hedges rather than any huge new fundamental statement of intent made by real money managers," Jonathan Wilmot, global strategist at CSFB, told Reuters. "Few of our clients want to make any big bold bets on the sustainability of this rally." London's FTSE 100 index hit a two-month high, closing up 2.53 percent at 3,861.10 and Zurich's SMI ended at a six-week high up 3.50 percent at 4,453.30. France's CAC 40 closed up 3.43 percent at 2,890.68, bringing its rally to 20 percent since it hit a six-year low last Wednesday. At 1700 GMT Frankfurt's electronically-traded Xetra DAX was up 4.24 percent at 2,715.31. Shortly before, with only Frankfurt still trading officially, the FTSE Eurotop 300 index of pan-European blue chips was up 3.4 percent at 813.4 points -- potentially its best close since January 21 -- while the narrower DJ Euro Stoxx 50 index jumped 4.2 percent to 2,247 points. The benchmark Eurotop 300 was up 7.6 percent so far on the week, having rebounded almost 19 percent since plunging to its weakest close in more than six years on March 12. Brent crude oil prices have slumped by around 25 percent to about $25 a barrel over the last fortnight, and the flagging dollar has recovered about five cents against the euro over the same period. Sentiment was buoyed as U.S. armored columns raced deep into Iraq and British marines seized vital oil facilities in the South. Volume was relatively good and dealers said activity was boosted by double- and triple-witching -- the simultaneous expiry of stock index futures, stock index options and individual stock options -- across the region. ING rose 11.4 percent, while France's AXA and Britain's Prudential jumped more than 7.5 percent each, as investors cheered a revaluation in the insurance sector's huge equity holdings. Banking stocks also rose, with BNP Paribas, Deutsche Bank and UBS all gaining more than five percent each. Shares in German travel firm Tui surged 8.7 percent as investors bet on a return to normal holiday patterns in the event of a swift end to the Iraq crisis. Airline stocks also fared well for similar reasons. National flag carriers British Airways and Air France jumped 7.3 percent and 6.1 percent respectively, while no-frills airlines Ryanair and EasyJet surged 8.8 percent and 8.6 percent. Saint-Gobain rose 8.2 percent to 27.2 euros after Merrill Lynch raised its price target on the stock to 45 euros from 40 euro citing reduced asbestos litigation risks. The French building materials group late on Thursday also announced plans to up its dividend payout and said activity during the first two months of 2003 was in line with its modest annual growth targets. However, Spain's Inditex fashion retailer sank 19.7 percent amid a slew of broker downgrades on disappointing results.
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