European shares advance for 5th day; focus on Fed

* FTSEurofirst 300 rises 0.3 pct, gains for 5th session

* Investors await Fed’s policy decision

* Construction and material shares among top gainers

By Atul Prakash

LONDON, Nov 3 (BestGrowthStock) – European equities climbed higher
for a fifth straight session on Wednesday on hopes that the U.S.
Federal Reserve’s likely move to announce further monetary
easing will lead the economy on a recovery path.

The stock market has gained 10 percent in two months on
hopes of the Fed’s action, with markets pricing in that the
central bank will commit to buy at least $500 billion in
Treasuries over five months. The scope and pace of bond
purchase, however, is uncertain.

At 0956 GMT, the FTSEurofirst 300 (.FTEU3: ) index of top
European shares was up 0.3 percent at 1,097.34 points after
hitting a six-month closing high in the previous session on
encouraging company results.

Construction and materials shares were among the top
gainers, lifted by expectations that an economic recovery will
spur demand. The sector index (.SXOP: ) rose 1.1 percent, with CRH
(CRH.I: ), HeidelbergCement (HEIG.DE: ) and Holcim (HOLN.VX: ) up 2.6
to 6.4 percent.

Investors trained their eyes on the Fed’s decision, likely
to be announced at around 1815 GMT. It is seen announcing a new
policy to buy government bonds in an attempt to breathe new life
into the struggling U.S. economy.

“If they deliver a policy, which at the very least is in
line with the consensus and potentially offers some hope of a
greater eventual number being reached, then you have got your
short term catalyst for this market to go up,” said Ian
Richards, European equity strategist at RBS.

“The more, as a policy maker, you can do to reduce the cost
of capital, the more you increase the likelihood that the
corporate sector will start to invest. I would be optimistic
that it’s an incremental positive in terms of real economic
prospects.”

With the U.S. economy expanding at only 2 percent in the
third quarter and the jobless rate stuck around 9.6 percent, the
Fed has come under pressure to do more to stimulate business
activity.

“It’s a herd mentality. Everybody thinks that this
quantitative easing is going to push up prices of stocks and
nobody wants to miss the rally,” said Koen De Leus, strategist
at KBC Securities, in Brussels.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a preview of the meeting, see [ID:nN01141530] PDF on earlier reports: http://link.reuters.com/pyb23q For more stories on Fed policy, see [FED/AHEAD])) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

U.S. ELECTIONS

Stocks were also supported by news that Republicans, viewed
as more pro-business by investors, pushed Democrats decisively
from power in the U.S. House of Representatives and strengthened
their ranks in the Senate. [ID:nN03266983]

Analysts said a divided Congress makes passing new laws
harder and lessens uncertainty for corporations. Republicans had
pushed an agenda of spending cuts and at least a partial repeal
of the healthcare and Wall Street reforms.

Financial stocks were among the top gainers, with the STOXX
Europe 600 banking index (.SX7P: ) rising 0.6 percent. Societe
Generale (SOGN.PA: ) rose 3.5 percent after saying it would not
need a capital increase to meet tougher industry rules as it
reported forecast-beating quarterly results.

Standard Chartered (STAN.L: ), HSBC (HSBA.L: ), BNP Paribas
(BNPP.PA: ) and Natixis (CNAT.PA: ) rose 1 to 1.5 percent.

Among individual movers, Swiss chemicals maker Clariant
(CLN.VX: ) gained 3.8 percent after raising its full-year
profitability target after net profit soared in the third
quarter thanks to a one-off tax gain and increasing demand for
industrial goods. [ID:nLDE6A122H]

Norway’s Statoil (STL.OL: ) fell 5.6 percent as it slashed its
2010 oil and gas production target after extensive maintenance
during the third quarter weakened earnings and cast doubt on its
plans to boost production by up to 14 percent by 2012.
[ID:nLDE6A209Z]
(Editing by Louise Heavens)

European shares advance for 5th day; focus on Fed