* FTSEurofirst 300 up 0.8 pct; hits 1-wk closing high
* Miners among top gainers as metals prices advance
* Volkswagen, Porsche up on merger comments
By Atul Prakash
LONDON, Jan 26 (Reuters) - European equities hit a one-week
closing high on Wednesday as the U.S. President Barack Obama's
proposal of corporate tax cuts boosted market sentiment, while
stronger metals on hopes of improving demand helped miners.
Expectations that the Federal Reserve, wrapping up a two-day
meeting later on Wednesday, will acknowledge an improving U.S.
economic outlook added to the positive tone. Strong U.S. home
sales data also helped the market. []
The FTSEurofirst 300 <> index of top shares finished
0.8 percent higher at 1,152.71 points -- the highest since Jan.
18. The index, which fell 0.6 percent in the previous session,
is up 2.8 percent this year after gaining 7.3 percent in 2010.
Resource-related shares topped the gainers' list, as key
base metals prices jumped on a weaker dollar and on hopes that
an improvement in the global economy will increase metals
demand. The STOXX Europe 600 Basic Materials index <.SXPP> rose
2.5 percent, while Anglo American <AAL.L> gained 2.6 percent.
"Obama is trying to convey his hopes that the health of
corporate America is important. He would like to simplify the
tax system and keep corporate tax rates low. That has been taken
well by investors," said Keith Bowman, equity analyst at
Hargreaves Lansdown.
"Investors are also expecting that comments from the Fed
will be generally supportive. The focus is still on corporate
results and so far the earnings season has been generally good."
In his State of the Union address to Congress late on
Tuesday, Obama asked lawmakers to work with him to cut the
corporate tax rate and simplify the tax code, moves that could
lead to higher corporate profits. []
"Obama's comments seems to have lifted sentiment and helped
calm some nerves. It was a very bullish speech and we can expect
to see more of the same from the Fed," said David Jones, chief
market strategist at IG Index.
The market was also supported by macroeconomic figures
showing new U.S. single-family home sales raced to their highest
in eight months in December while prices were the highest since
April 2008, raising optimism for a housing market recovery.
[]
FOCUS ON FED
Focus was on the policy-setting meeting of the Federal Open
Market Committee, which will likely take note of growing reasons
for economic optimism. Consumer spirits are rising, factory
activity is strengthening and jobless claims are sliding.
"The Fed will need to be wary of the recent slump in UK
growth and not wish to suffer the same thing so investors are
hoping to hear that they will remain vigilant in ensuring growth
can be sustained," said Angus Campbell, head of sales at Capital
Spreads.
Carmakers also gained ground, with the STOXX Europe 600
Automobiles & Parts index <. SXAP> up 2.5 percent. Porsche
<PSHG_p.DE> rose 7 percent after a senior family member said its
merger with Volkswagen <VOWG_p.DE> was on the right track
[]. Volkswagen rose 3.3 percent.
In the energy sector, Repsol <REP.MC> rose 2.1 percent after
Petrobras <PETR4.SA>, its partner in Brazil's offshore Carioca
block, struck oil again in the area. []
Swiss engineering group ABB <ABBN.VX> rose 1.5 percent after
it said it expected to report double-digit net income growth on
winning a large number of power infrastructure orders in Europe
and the Middle East in the fourth quarter. []
Across Europe, the FTSE 100 <>, Germany's DAX <>
and France's CAC 40 <> rose 0.7 to 1 percent.
(Additional reporting Harpreet Bhal; Editing by Jon
Loades-Carter)
