Europe shares make biggest weekly gain in 6 months

* FTSEurofirst 300 closes 0.1 pct higher

* Index rises 3.3 pct over the week, biggest gain in 6 mths
* Uncertainty persists on Portugal, euro zone debt

By Brian Gorman

LONDON, March 25 (Reuters) – European shares edged up on
Friday, and recorded their biggest weekly gain in six months,
with investors increasingly confident Japan’s nuclear crisis and
Middle East unrest would not derail global growth.

The pan-European FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) index of top
shares rose 0.1 percent to 1,124.65 points, the highest close
since March 10. Volumes were 77.5 percent of the 90-day average.
Over the week, the index rose 3.3 percent, the biggest gain
since September, and has regained almost half the ground lost in
the fall between a February high and a March low.

Drugmakers (.SXDP: Quote, Profile, Research) were among the gainers, with investors
lured by cheap valuations. The sector is still down more than 4
percent in the year to date, compared with a 0.3 percent gain
for the pan-European benchmark.

Heavyweights GlaxoSmithKline (GSK.L: Quote, Profile, Research), AstraZeneca (AZN.L: Quote, Profile, Research)
and Sanofi-Aventis (SASY.PA: Quote, Profile, Research) rose between 0.9 and 1.2 percent.

News that the U.S. economy is growing more quickly than
previously estimated also helped shares. [ID:nN25243056]

Stock markets worldwide have benefited from monetary
stimulus. But some strategists say some momentum might be lost
in the run-up to the end of the Federal Reserve’s second round
of quantitative easing in June.

“As people anticipate the finishing of QE2, it could be a
challenging time. The last time the Fed turned off the printing
presses, the markets had a tough time,” said Andy Lynch, who
managers 2.5 billion euros ($3.50 billion) for Schroders.

He added: “We will see interest rate rises, though it’s not
the right thing to do.”

Fund managers also pointed to continued uncertainty in the
peripheral economies of the euro zone.
European leaders agreed a new package of anti-crisis
measures at a two-day summit, but were forced to delay
increasing their rescue fund and acknowledged they faced new
threats from a government collapse in Portugal. [ID:nLDE72O009]

Economists suggested Portuguese yields were above
sustainable levels and a bailout was likely. [ID:nLDE72O009]

“The market was being helped by good company results and
positive outlook statements; investors have been buying on
dips,” said Colin McLean, managing director at fund group SVM
Asset Management in Edinburgh, which has 630 million pounds
($1.01 billion) assets under management.

“However, Europe’s issues are still not resolved, and going
into the second quarter there could be some weakness.”

Across Europe, Britain’s FTSE 100 (.FTSE: Quote, Profile, Research), Germany’s DAX
(.GDAXI: Quote, Profile, Research) and France’s CAC40 (.FCHI: Quote, Profile, Research) rose between 0.1 and 0.3
percent. Portugal’s benchmark (.PSI20: Quote, Profile, Research) and Spain’s IBEX (: Quote, Profile, Research)IBEX>
fell 0.2 and 0.4 percent, respectively.

BP RISES

BP (BP.L: Quote, Profile, Research) recovered from earlier falls to close 0.6 percent
higher. Russia’s Rosneft (ROSN.MM: Quote, Profile, Research) vowed to push ahead with a
strategic alliance with BP, despite a block on the deal by the
British oil company’s partners in joint venture TNK-BP
[TNKBP.UL].

On the downside, Autonomy (AUTN.L: Quote, Profile, Research) slipped 3.4 percent after
JPMorgan downgraded the software firm’s 2012 earnings estimates.

Thomson Reuters Datastream figures showed the STOXX Europe
600 (.STOXX: Quote, Profile, Research) index priced at 10.2 times forecast earnings, below
a 10-year average of 13.6, while the S&P 500 (.SPX: Quote, Profile, Research) has a
one-year forward price-earnings ratio of 12.5 times.

Some analysts suggested higher dividends would also tempt
investors back into the market.

“With investors quite keen to persuade company management to
return more cash to them, I think dividend growth, in aggregate,
could surprise slightly to the upside,” said Ian Williams,
strategist at Altium Securities.
($1=.6217 pounds)
(Additional reporting by Joanne Frearson; Editing by Will
Waterman)

Europe shares make biggest weekly gain in 6 months