European shares top five-year highs as periphery rally continues

Fri Jan 17, 2014 8:45am EST
 
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By Marc Jones

LONDON (Reuters) - European shares reached a new 5-1/2 year high on Friday as a third weekly gain on the spin for Portuguese and Spanish bonds fed improving sentiment in the region's Mediterranean rim.

Disappointing results from some of Wall Street's big names on Thursday had dampened investors' mood overnight but Europe's ongoing recovery and hopes U.S. data later will paint a brighter picture put a spring back in their step.

Future's prices pointed to gains of around 0.3 percent for the major U.S. indexes when trading resumes in New York, while the dollar index .DXY, which tracks the greenback against a basket of six major currencies, was already pushing higher.

After another week of steady progress, European shares .FTEU3 were on the up again as they climbed 0.5 percent.

London's FTSE .FTSE, Paris's CAC 40 .FCHI and Frankfurt's Dax .GDAXI all made gains and bourses in Portugal, Italy .FTMIB and Spain .IBEX continued their red hot streak to leave the region heading for its fourth week of gains in five.

"Investors are willing to take more risk and in the periphery we have seen quite a lot of good developments," said Rabobank euro zone economist Emile Cardon.

"I think economic growth in most European countries will continue to rise ... Portugal saw a lot of demand when it went to the capital markets and we have seen quite good progress in Ireland, so most of these developments are supportive."

After a brief early breather, euro zone bond markets also continued their rally as Portuguese and Spanish government bonds added to a third week of strong gains.   Continued...

 
People walk past an electronic information board at the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth