Europe shares end up despite late sell-off

* FTSEurofirst 300 ends 0.4 pct higher; off 28-month highs

* Insurers among top gainers; sector index up 1.8 percent

* Draka slumps as China’s Xinmao Group drops cash bid

By Atul Prakash

LONDON, Jan 6 (BestGrowthStock) – European equities climbed to their
highest in nearly 28 months on Thursday, though pared gains late
in the session as investors scaled back their trading positions
ahead of Friday’s U.S. non-farm payrolls data.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares
finished up 0.4 percent at 1,147.23 points after touching
1,154.10, the highest since mid-September 2008. It rose more
than 7 percent last year after 26 percent gains in 2009.

“Investors are expecting to see very good numbers from
tomorrow’s non-farm payrolls report. And if we do get
unbelievable numbers, then it could pose some threat to QE2,”
said Joshua Raymond, strategist at City Index, referring to the
U.S. Federal Reserve’s stimulus measures.

“We are just seeing a bit of profit-taking and removing some
risks ahead of tomorrow.”

Forecast-beating U.S. private-sector jobs data on Wednesday
raised expectations the payrolls figures will be good. The
report is expected to show non-farm payrolls jumped 175,000
after November’s surprisingly small 39,000 gain. [ID:nN06111595]

Insurers featured among the top gainers, with the sector
index (.SXIP: ) up 1.8 percent, AXA (AXAF.PA: ) gaining 2 percent
and Allianz SE (ALVG.DE: ) rising 1.6 percent on expectations of
improving economic conditions.

Analysts remained positive on the market’s medium- to
longer-term outlook.

“Equities remain very attractive, given the dividends they
pay in a low-interest rate environment; liquidity conditions
remain good, and valuations are undemanding,” said Henk Potts,
equity strategist at Barclays Wealth.

According to Thomson Reuters Datastream, the STOXX Europe
600 (.STOXX: ) carries a forward price-to-earnings (P/E) ratio of
10.8, below a 10-year average of 13.7. This compares with a
forward P/E ratio of 13.1 for Wall Street’s S&P 500 (.SPX: ).

DEBT CONCERNS

However, Thursday’s gains in European equities were clouded
by weaker Spanish and Portuguese shares, hurt by nagging worries
over their debt levels. Spain’s IBEX (.IBEX: ) fell 1 percent,
while Portugal’s PSI 20 (.PSI20: ) slipped 1.2 percent.

A majority of economists polled by Reuters said Portugal
will need a European Union-led bailout at some point similar to
those handed out to Ireland and Greece in 2010. [ID:nLDE7041QM]

On the economic front, new U.S. claims for jobless benefits
moved higher last week, but a drop in the four-week average
indicated that a trend toward better labour market conditions
remained intact. Figures also showed U.S. comparable chain store
sales rose 3.1 percent in December. [ID:nN06111595]

Among individual movers, ARM Holdings (ARM.L: ) was up 2.3
percent after Microsoft (MSFT.O: ) said it planned a Windows
operating system compatible with chips designed by ARM.

Draka (DRAK.AS: ) fell 8.4 percent after China’s Xinmao Group
dropped its 1 billion euro ($1.31 billion) cash bid for the
Dutch cablemaker, leaving Italy’s Prysmian (PRY.MI: ) free to seal
its own deal with Draka. Prysmian surged 7.9 percent.

German carmaker Daimler (DAIGn.DE: ) rose 1.9 percent after
government sources said the automaker and Volkswagen (VOWG_p.DE: )
would sign deals totalling $5 billion at a meeting with Chinese
Vice Premier Li Keqiang on Friday. [ID:nLDE70517K]

Across Europe, Britain’s FTSE 100 (.FTSE: ) fell 0.4 percent,
Germany’s DAX (.GDAXI: ) gained 0.6 percent and France’s CAC 40
(.FCHI: ) was flat. The Thomson Reuters Peripheral Eurozone
Countries Index (.TRXFLDPIPU: ) was down 1.4 percent.
(Additional reporting by Blaise Robinson; Editing by Will
Waterman)

Europe shares end up despite late sell-off