* FTSEurofirst up 0.3 percent
* Fears over U.S. fiscal cliff ease
* Miners extend value rally
* Nokia rallying on Lumia sales hopes
By David Brett
LONDON, Dec 18 European shares rose close to
2012 highs on Tuesday on signs that U.S. lawmakers might reach
agreement to avoid looming tax hikes and spending cuts that
threaten to hurt the world's biggest economy.
By 1132 GMT, the FTSEurofirst 300 was up 3.49
points, or 0.3 percent at 1,136.01, nearing its peak for the
year of 1,141.32, as was France's CAC, at 3,638.87.
Shares gained after U.S. President Barack Obama made a
counter-offer to Republicans that included a change in position
on tax hikes for the wealthy, according to a source.
But with the CAC and FTSEurofirst near year-to-date highs
and Germany's DAX at fresh 2012 highs, and with no formal U.S.
deal on the table, investors were not getting carried away.
"It is a concern because it would not be great if the
world's biggest economy fell back into recession," Andrea
Williams, European fund manager at Royal London Asset
"(But) I would like to think the parties would get
themselves sorted and not let the economy go back into recession
again but you have to have faith in the politicians," she said.
Shares in Nokia jumped 5 percent on expectations
for good sales of its new Lumia smartphone models in the crucial
Christmas shopping season, a trader said. Shares of the Finnish
company have plunged 17.5 percent this year as the company, once
the world's biggest mobile phone maker, has lost market share to
Apple and Samsung.
Basic resources shares were the best-performing
stocks by sector. Having underperformed broader markets by up to
25 percent this year, the sector has risen 10.8 percent in the
last month on valuation grounds and reassuring economic data
Elsewhere, security firm G4S rose 3 percent,
shrugging off the recent negative sentiment surrounding its
Olympics tender to trade better on a Financial Times report that
a government contract relating to welfare reform is about to be
Flows into European equity funds climbed to a three-month
high last week as U.S. investors beefed up their exposure to
Europe, according to EFPR data.
The renewed demand for European shares has been driven by
the data from China, a European Central Bank pledge made in
September to do what it takes to save the euro, and optimism
that a U.S. budget deal will be struck.
Williams at Royal London Asset Management is cautious about
equities, saying the risk of further problems in Europe cannot
be ruled out, but is "overweight" on telecoms and
healthcare for dividend exposure.
Her big sector bet is insurance over banks, where
she has been reducing her investments on concerns over further
She is also "overweight" on industrials for their
emerging market exposure.
Industrials were among the top performers on Tuesday with
the sector index up 0.4 percent and winners included Swedish
compressor and mining gear maker Atlas Copco, which
was 0.8 percent higher.
Volumes suggested the seasonal wind down had already begun
with indexes trading at around 35 percent of their already weak
90-day daily average, which sets the scene for some choppy
sessions heading into the Christmas break.
"This could add to any intraday volatility but as has been
the case since the Presidential election, it's going to be the
fiscal cliff that stands to dominate market sentiment for now,"
Fawad Razaqzada, Market Strategist at GFT Markets, said.