Europe stocks near year-high close
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LONDON, England (Reuters) -- Oil and financial shares helped European equity markets end Thursday a hair below 2003 highs, as fresh signs that an economic recovery is on track offset concern over the impact of a weakening dollar on export revenues.
Pharmaceuticals also boosted the market -- contributing along with oils and financials to half of total market gains.
Shire Pharmaceuticals extended Wednesday's late gains after a delay to its case against Barr Laboratories for seeking to market a generic version of one of Shire's biggest-selling drugs.
Shares in Celltech also jumped 4.5 percent after the chief executive of Britain's biggest biotechnology firm told Reuters in an interview that more than 20 companies were interested in licensing its biggest drug hope, CDP 870, following the loss of Pfizer as a marketing partner.
But French road builder Vinci was a sore spot, shedding four percent on news France would keep control of leading motorway firms such as Autoroutes du Sud de la France (ASF). ASF shed 2.3 percent.
The FTSE Eurotop 300 index closed up one percent at 945 points, or four points below the 2003 high it reached on Monday, while the DJ Euro Stoxx 50 gained 0.8 percent to 2,715 points.
The benchmark Eurotop 300 index is currently 10 percent above breakeven for the year as markets headed for their first annual equity returns in four years.
A better-than-expected U.S. weekly job report and an the eighth monthly rise in a key business confidence survey in Germany, Europe's biggest economy, added to evidence that recovery was underway in the global economy and would translate into higher corporate earnings.
The publication of a much better-than-expected business conditions report by the Philadelphia Federal Reserve, after European markets' close, also showed sharp improvements in its employment and new orders components.
The Dow Jones industrial average was up 0.5 percent and the tech-heavy Nasdaq Composite Index 1.1 percent higher after the publication of the Philadelphia Fed report.
But fears that a continuous rise of the euro -- which on Wednesday hit a new record high against the dollar of $1.2436 -- may hurt exporters and derail European economic recovery undermined sentiment this side of the Atlantic.
"The rise in the Ifo index suggests that GDP growth is likely to accelerate near-term. However, with the euro moving from strength to strength, the recovery could soon start to be questioned," said strategist Cressida Caldwell from Dresdner Kleinwort Wasserstein.
The German economy is heavily reliant on exports and a strong euro makes its products less competitive in the key U.S. market.
Strategists said companies were able to handle a stronger euro in the short-term, but if the current leg-up turned out to be a long-term structural move for the currency, then it may be damaging for European equities.
"For the time being, it remains the upbeat global cycle that drives German business sentiment but the strengthening currency remains a serious threat to sentiment going forward."
Export-driven stocks such as carmaker Volkswagen and chemicals group BASF were up on Thursday amid hopes that faster economic growth will help them offset the impact of a depreciating dollar on their revenues.
Royal Dutch/Shell, BP and other oil majors rose between one and two percent each with crude oil prices hovering at nine-month highs of over $30 a barrel as a cold U.S. winter nibbled away at crude inventories.
Allianz was another strong climber, up 2.7 percent after Lehman Brothers bank raised its rating on the stock to "equalweight" from "underweight" in expectation of better earnings next year.
Britain's Dixons led retailers higher following a UK government's decision not to ban the selling of lucrative extended warranties at the point of sale.
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