Europe stocks see bullish 2004
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LONDON, England (Reuters) -- European shares rose for a seventh straight session on Wednesday, crowning their first year of gains since 1999 as investors bet on economic recovery to keep stocks on an upward track in 2004.
A fall in U.S. jobless claims to a near three-year low on Wednesday underscored faith in the world's motorhouse economy to create new jobs so consumers keep spending to prop up business activity and corporate profits.
Heavyweight oils lent key support to bourses, with Royal Dutch/Shell and Total firmer, helped by crude oil prices of above $30 a barrel in London.
Retailers in the UK and elsewhere outperformed on news from Asda, Britain's second-biggest grocery chain, that its stores enjoyed record trading ahead of Christmas, another sign that spending, a key economic prop, was in good shape.
UK rivals Tesco and Morrison both rose, while Europe's top supermarket chain Carrefour of France and Dutch peer Ahold also pushed higher.
French retailer Casino was buoyed by a report it was considering an initial public offering or sale of its Internet unit Cdiscount.
The FTSE Eurotop 300 index ended 0.2 percent ahead on the day at 957.94 points, just a point away from Tuesday's high for the year, the culmination of a scorching 40 percent rally from March's six-year lows when investors were gripped by worries of war in Iraq.
The pan-European benchmark is up 11.7 percent for the year after falling 46 percent over the prior three years when a record bull run unravelled with a bursting technology bubble.
Europe's technology sector was the region's top industry gainer in 2003, soaring by over a third as beaten down stocks like Alcatel of France rebounded.
Bullish on 2004
All European markets and Wall Street are shut on Thursday for New Year's Day, and exchanges are expected to kick-off a new year on Friday in a bullish if not choosier frame of mind.
"The momentum on GDP is still pretty good," said Andrea Williams, head of European equities at Royal London Asset Management.
"The market might go back to bigger caps and the more reliable growth names that have underperformed. Cyclicals usually have a good first quarter as people anticipate economic recovery," Williams said.
Royal London is forecasting an above-consensus rise of 15 percent in European shares in 2004, largely in the first half as investors bet on interest rates rises after June.
"Following significant gains in equities since the market nadir in March, investors are likely to become more selective in '04 as interest rates and valuations become more of a concern," said Clive McDonnell of Standard & Poor's equity research.
Most strategists see gains of up to 10 percent next year.
The DJ Euro Stoxx 50 index, which tracks the euro zone's top blue chips, rose 0.4 percent to 2,760.66 points on the day, and ended 2003 up 15.7 percent.
More Parmalat arrests
Investors generally remained unfazed by the unfolding scandal at Italian food and dairy group Parmalat.
On Wednesday, Italian police arrested seven people suspected of fraud at the group, dramatically widening the investigation into one of the world's largest corporate scandals.
Parmalat shares were suspended indefinitely on Monday after crumbling 90 percent, but the scandal has yet to damage investor confidence more broadly as Enron or WorldCom scandals did.
"It will be interesting to see how Parmalat develops and whether it has any impact on the wider market or if people begin to question Italy's market. It has not happened yet," said Royal London's Williams.
As bourses shut, the Dow Jones industrial average was flat at 10,422 points. The widely-watched blue-chip index is up by a quarter this year and is also set to snap a three-year losing streak.
The Nasdaq Composite was off 0.5 percent at 1,998 points, but the totem of the world's top technology firms has climbed about 51 percent this year.
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