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* STOXX Europe 600 index up 0.2 pct
* Banks advance on Fed's move, hints
* Precious metals miners among top fallers
By Atul Prakash
LONDON, Dec 15 European shares rose on Thursday,
helped by gains in global banks following the U.S. Federal
Reserve's interest rate hike overnight, while growing corporate
deal activity continued to underpin year-end optimism.
The pan-European STOXX 600 was trading up 0.2
percent, inching back towards an 11-month high scaled earlier
this week. The benchmark index is still down nearly 3 percent so
far in 2016, but could close the year in positive territory if
the market witnesses an end-of-year rally.
The European banking index was up 1.5 percent,
boosted by a 2.1 to 4 percent rise in lenders such as Deutsche
Bank, BNP Paribas, Societe Generale
and Barclays following the Fed's move.
Shorter-dated U.S. Treasury yields surged on Wednesday, with
those on two-year notes climbing to their highest in more than
seven years after the Federal Reserve raised interest rates for
the first time in a year and flagged more rate increases in
Higher yields are a boon to banks' profitability.
"We think that the Fed will continue to be very gradual in
its rate hikes and we look for maybe two to three rate hikes in
2017, depending on how growth comes out next year," said Bob
Baur, chief global economist at Principal Global Investors.
"We expect to see higher stock prices, faster nominal
growth, mildly higher interest rates and just a bit more
Also helping financials, Italian banks rose 1.9
percent and were on course for a third straight week of gains.
Italian banks have staged a rebound since the appointment of
Paolo Gentiloni as the country's prime minister on expectations
that a stable political environment would help ailing banks to
recapitalize. Gentiloni has won the backing of the fragmented
Senate, allowing his government to formally take office.
Spain's Grifols rose 6 percent, the top gainer in
the STOXX 600 index, after saying it would buy U.S.
Hologic Inc's assets in their blood screening joint
venture and refinance its net debt in the first quarter of next
On the other end of the table, French utility EDF
fell around 12 percent, wiping off about 2.5 billion euros from
the company's market value, after warning of lower earnings in
2017. The stock, which headed for its biggest-ever one-day fall,
was the top faller in the STOXX 600 index.
Mining shares, the year's best performers in Europe, also
lost ground with the sector index falling 2 percent on a
firmer dollar following the Fed's move. A stronger dollar
generally makes commodities costlier for other currency holders.
Precious metals miners were among the hardest hit as gold
dropped to its lowest in more than 10 months. Shares in
Fresnillo, Randgold Resources, Acacia Mining
and Centamin slumped 5.7 to 9.2 percent.
(Editing by Catherine Evans)