News

Stronger banks and food producers helped European shares climb to a 15-month high on Friday, with investors awaiting U.S. employment data at 1330 GMT to take the temperature of the world''s biggest economy.

Investor appetite for risky assets such as equities grew, with the VDAX-NEW volatility index hitting a 16-month low. The lower the index, which is based on sell and buy options on Frankfurt''s top-30 stocks, the higher the market''s desire to take risk.

At 1208 GMT, the FTSEurofirst 300 index of top European shares was 0.6 percent higher at 1,066.77 points after rising to 1,067.34, the highest since October of 2008. The index climbed 26 percent in 2009 and has surged 65 percent since hitting a record low in early March last year.

Volumes remained low, with 89 million shares changing hands by midday, just 39 percent of its 90-day daily average volume.

Banks were among the top gainers, with Standard Chartered, Barclays, Royal Bank of Scotland, BNP Paribas, Societe Generale, Credit Agricole and UBS rising 0.5 percent to 3.6 percent.

The widely-followed data is expected to show the U.S. economy stopped shedding jobs last month for the first time since it fell into recession two years ago.

A Reuters survey of 84 economists on Thursday forecast non-farm payrolls would be flat in December after dropping by 11,000 in November, far fewer than in previous months.

Charts painted a positive picture. The FTSEurofirst 300 index has cleanly broken it major resistance at around 1,023 points, the 38.2 percent Fibonacci retracement of the bear market that began in mid-2007. In the medium term, the index may target 1,140- the 50 percent retracement.

Across Europe, Britain''s FTSE 100 index was flat, Germany''s DAX rose 0.3 percent and France''s CAC 40 gained 0.6 percent.

Macro data helps

European economic data also supported the market. A stronger jump in inventories and positive net trade drove the euro zone out of recession in the third quarter, but investment was weaker than thought, revised data showed.

"Latest euro zone data and survey evidence continue to show overall improvement and growth in the fourth quarter of 2009 is likely to have at least matched the third-quarter outturn," said Howard Archer, economist at IHS Global Insight.

German exports rose for the third month running in November, giving a boost to economic growth in the fourth quarter. But figures also showed that Swiss unemployment rose to its highest level in nearly 12 years in December and British factory gate inflation rose more than expected in December.

Food producers were in demand, with CSM NV, Unilever, Nestle, Danone and Parmalat advancing between 0.2 and 3.2 percent.

But energy shares lost ground as crude oil prices fell 0.2 percent. BP, Royal Dutch Shell, BG Group, Tullow Oil and Total shed 0.2 to 1.6 percent.

ENRC jumped 5.5 percent as RBS upgraded its stance on the firm to "buy" from "hold" in a sector review.