Europe stocks hit 19-month highs
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LONDON, England (Reuters) -- European shares rallied to fresh 19-month highs Thursday, spearheaded by Royal Bank of Scotland's bumper six-billion-pound profit and hints a U.S. economic recovery is creating new jobs to reassure consumers.
Dutch insurer ING was among the few top blue-chip decliners as investors looked past a forecast-topping 18 percent leap in 2003 core profit to focus on a wary outlook.
In contrast, Swiss engineering firm ABB's steep loss in 2003 was ignored as relieved investors seized on the firm's forecast for a return to profit this year, sending its shares up 10 percent.
The FTSE Eurotop 300 index closed up 1.3 percent at 1,017.27 points, the pan-European blue-chip benchmark's best close since ending at 1,025.79 on July 10, 2002.
More than three stocks rose for each one that fell in good volume amid predictions of more gains to come as the European reporting season continues through next week.
"For the last eight months it's been an asset allocation switch," said Robert Sellar, a fund manager at Aberdeen Asset Management.
"When you have a bond market doing nothing and yielding little, it's difficult to sit on the sidelines and have money in bonds and watch equities go higher and higher," Sellar said.
The narrower DJ Euro Stoxx 50 index rose 1.2 percent to 2,932.95 points, its highest close since mid-July 2002.
Gains on Wall Street due to reassuring numbers from retail giant Wal-Mart and chip gear maker Applied Materials also underpinned European bourses.
"Applied Materials showed that you can expand margins. By now 82 percent of the technology companies in the S&P 500 index, a proxy for the global technology sector, has seen 2004 estimates increased," Sellar said.
As European markets shut, the Dow Jones industrial average was up 0.5 percent at 10,729 points, while the tech-laden Nasdaq Composite was 0.3 percent higher at 2,083 points.
Record profit
Shares in Royal Bank of Scotland, Britain's second-biggest bank by assets, rallied 5.8 percent to 1,730 pence after reporting a record profit of 6.16 billion pounds and said it would consider returning some of its cash to shareholders.
The DJ Stoxx European basic producer sector index rose two percent to its highest level since June 2002, with the industry group up more than eight percent so far this year, outperforming the broader market.
The sector was led higher by BHP Billiton, whose shares jumped 5.8 percent after the world's biggest diversified miner saw second quarter profit more than doubling due to surging sales in China where insatiable demand for raw materials has lifted metal prices.
Norway's Orkla soared 14 percent after Danish brewer Carlsberg bought Orkla's stake in its core Carlsberg Breweries operation for $2.55 billion, ending a tug-of-war over strategy.
And shares in Irish drug maker Elan Corp Plc hit a 20-month high in the wake of news that it was fast-tracking its much-vaunted experimental drug Antegren.
Currency concern
The world's biggest spirits firm, Diageo Plc, said a recent fall in the U.S. dollar to a record low against the euro and an 11-year low against sterling could wipe out faster growth in key brands such as Johnnie Walker whisky.
Shares in the maker of Smirnoff vodka and Guinness beer fell 0.4 percent to 707 pence.
The euro's climb makes euro zone exports more expensive and triggered a sharp narrowing of the single currency area's trade surplus in 2003, though the surplus in December rose to a higher-than-expected 5.7 billion euros.
Stock market investors welcomed news that U.S. jobless claims fell much more than expected in the latest week, suggesting the labour market was improving to help bolster consumer confidence.
A closely watched gauge of future U.S. economic activity showed its largest increase since October and, after European markets shut, the Philadelphia Federal Reserve's survey showed manufacturing in the U.S. mid-Atlantic region had expanded briskly in February, though it eased from a two-decade high in January.
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