By Toni Vorobyova
LONDON, May 7 (Reuters) - European shareshit their highest
close since mid-January on Wednesday as record crude boosted
heavyweight oil groups, builders and techs gained from strong
results, and a weakening euro supported exporters.
Sentiment on the health of the world economy was supported
by a bigger-than-expected rise in first quarter U.S. non-farm
productivity. Inflation-wary equities also took heart from news
that unit labour costs in the sector rose less than anticipated.
The pan-European FTSEurofirst 300 index <> ended 0.8
percent higher at 1,362.11 points, with gainers outweighing
declining stocks by two to one.
"It's been a great day (for European equities)...the
economic newsflow certainly in America has been a bit better
than expected and that's been encouraging," said Mike Lenhoff,
chief strategist at Brewin Dolphin.
"The earnings newsflow has not been as poor as had been
expected, which has also been a bit of a support," he added.
The euro fell towards a six-week low against the dollar
<EUR=>, making European equities more attractive to foreign
investors.
The technology sector <.SX8P> was the best performer in
Europe after Cisco Systems <CSCO.O>, the largest U.S. maker of
routers and switches that direct Web traffic reported
better-than-expected quarterly results late on Tuesday.
Nokia <NOK1V.HE>, Ericsson <ERICb.ST> and ASML <ASML.AS> all
gained between 3.6 and 3.9 percent.
Constructions stocks, meanwhile, were lifted by strong
profits at French cement maker Lafarge <LAFP.PA>.
"We continue to see Lafarge as one of the best places to
have money in the sector in the current turbulent times because
of its big exposure to emerging markets," Citi said in a note,
reiterating its 'buy' rating on the stock.
Britain's FTSE 100 index <> and France's CAC 40 <>
rose 0.7 percent, while Germany's DAX index <> added 0.8
percent. All three national indexes posted their highest close
in nearly four months.
HOT PROPERTY
Britain's star performer was pub firm Enterprise Inns
<ETI.L>, which hit its highest this year and closed nearly 30
percent stronger after getting the green light from the
government to convert to a tax-efficient property status.
Energy firms rose as oil prices <CLc1> set another record
high, closing in on $123 a barrel. BP <BP.L> and Royal Dutch
Shell <RDSa.AS> rose 1.3 percent, while StatoilHydro <STL.OL>
gained 4 percent.
"Predictions that the oil super spike could see prices reach
$200 also seem to have supported speculators although we would
be concerned that slower global growth should reduce oil demand
eventually," nabCapital said in a research note.
"High oil prices will boost oil stocks but we could see some
downgrades to manufacturing share prices."
Norsk Hydro <NHY.OL> and Deutsche Post <DPWGn.DE> were among
the day's biggest losers after trading without rights to
dividend.
On Thursday, the spotlight will return to the banking sector
with results from UniCredit <CRDI.MI>.
A rate decision from the European Central Bank is also due,
with policy seen on hold at 4 percent but investors looking for
any signs of a softening in the bank's hawkish rhetoric.
The Bank of England is also seen holding rates on Thursday,
at 5 percent, although markets see a small chance of a cut.
