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Business News/ Money / US housing data lifts European shares
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US housing data lifts European shares

US housing data lifts European shares

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London: European shares edged higher on Wednesday, as upbeat US housing data boosted hopes of a recovery in the world’s largest economy, offsetting falls in banks on concerns over the outlook for growth in the euro zone.

The pan-European FTSEurofirst 300 index closed up 0.1% at 1,003.58 points, to end higher for the third straight session in a choppy session where the index swung between positive and negative territory.

Data showed pending sales of previously owned US homes hit a six-month high in April, lifting shares on Wall Street.

BP rebounded off lows to end 0.1% lower, after a sharp 13% drop in the previous session. Traders said there was buying interest in the stock from some hedge funds and investors who are betting the stock will rebound from recent weakness.

The company forged ahead with its latest efforts to curb the flow of oil from its leaking well as the United States began investigating the spill, with US attorney general Eric Holder saying that “if we find evidence of illegal behaviour, we will be forceful in our response."

On the downside, banks were pressured by persistent fears the euro zone’s debt crisis could jeopardize economic recovery in the region, with Barclays, HSBC, Societe Generale and Deutsche Bank off 0.3% to 2.2%.

“Investors are still concerned that the euro zone debt problem is not over and it will keep hanging over the equity market until the market gets to a more reasonable valuation," said Koen de Leus, economist at KBC Securities.

The FTSEurofirst 300 index has lost around 10% since mid-April when fears of a sovereign debt crisis in the euro zone prompted investors to abandon riskier assets.

Among the gainers, Portugal Telecom rose 1.5% after Spain’s Telefonica raised its bid for PT’s stake in Brazilian mobile phone company Vivo to €6.5 billion ($7.9 billion) from €5.7 billion.

GlaxoSmithKline added 2% after Jefferies raised its rating for the company to “buy" from “hold".

Within the sector, AstraZeneca, Sanofi-Aventis and Novartis added 0.3% to 1.6%.

Prudential fell 2.5% after abandoning its plan to buy AIG’s Asian life unit AIA for $35.5 billion, bowing to shareholder criticism over the price it had agreed to pay and leaving its management under fire.

Planned layoffs stall

The number of planned layoffs at US companies in May was almost unchanged from April, suggesting employers are more upbeat about the economic outlook, a report by global outplacement consultancy Challenger, Gray & Christmas, Inc. showed.

The report comes days ahead of the government’s much-anticipated monthly US payrolls report, due on Friday, which is forecast to show non-farm payrolls rose by 513,000 in May after climbing 290,000 in April.

In Spain the jobless rate -- the highest in the euro zone -- fell at its fastest pace for five years in May, offering hope for its battered labour market, but the economic outlook remained gloomy and consumer confidence saw a record fall in the same period. shed 0.2%, Germany’s DAX was flat and France’s CAC 40 fell 0.1%.

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Published: 03 Jun 2010, 12:29 AM IST
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