* FTSEurofirst 300 up 1.1 pct, but down 45 pct in 2008
* France's CAC index falls 43 pct in '08
* Britain's FTSE 100 ends year with 31 pct plunge
By Atul Prakash
LONDON, Dec 31 (Reuters) - European equities advanced in
thin trading on Wednesday, but the region was set to post its
biggest annual fall as the markets were shattered by the worst
credit crisis since the Great Depression of the 1930s.
At 1440 GMT on the last trading day of 2008, the
FTSEurofirst 300 index <> of top European shares was up
1.1 percent at 833.13 points. It has slumped 45 percent this
year after gaining 1.6 percent last year and 16 percent in 2006.
Britain's FTSE 100 <> recorded its largest annual drop
since its launch in 1984, while France's benchmark index CAC-40
<> fell 43 percent, the biggest slump in its 20-year
history. Germany's DAX <> closed 40.4 percent down for the
year.
"It has been a dramatic year in so many senses, very bad
before September and became catastrophic thereafter. The problem
spread out from something which was predominantly confined to
financials to the broader markets and the broader economy," said
Jonathan Lawlor, head of European research at Fox-Pitt, Kelton.
"In terms of outlook for 2009, our view is that the central
banks and the regulatory authorities are going to do what is
necessary to avoid a deflationary onset. But clearly the first
quarter is going to contain a lot of continued trauma."
French-Belgian lender Dexia <DEXI.PA> was the top loser on
the CAC index in 2008, plummeting 81.4 percent, followed by
struggling car markers Renault <RENA.PA>, down 80.9 percent, and
Peugeot <PEUP.PA> that fell 76.6 percent, as signs of a deep
economic downturn sent global equities reeling.
The DJ Stoxx basic resources index <.SXPP>, home of Europe's
biggest mining companies, was the worst hit in 2008, sinking
64.9 percent, closely followed by the DJ Stoxx banking index
<.SX7P>, down 64.8 percent, while the best relative performer
among sectors was the DJ Stoxx health care <.SXDP>, down 18.8
percent in 2008.
On Wednesday, banks, which had a disastrous 2008 with many
seeking government bailouts, added most points to the European
index, with Barclays <BARC.L> up 3 percent, UBS <UBSN.VX> rising
2.7 percent, Standard Chartered <STAN.L> gaining 4.9 percent and
Royal Bank of Scotland <RBS.L> up 2.5 percent.
THIN TRADING
Trading volume remained thin as just a handful of bourses
were open in a shortened session ahead of the New Year break. A
number of markets such as Germany, Austria, Denmark, Finland,
Norway, Sweden, Italy, Spain, Switzerland and Japan were closed.
"If there's any optimism, it's on the basis that stock
markets recover in recessions," said Justin Urquhart Stewart,
director at Seven Investment Management.
"Last year we were so optimistic, that we were fooling
ourselves. It's now gone too far the other way. We've discounted
a huge amount of bad news."
Credit Suisse <CSGN.VX> said it will sell a sizeable chunk
of its fund management arm it considers as subscale to Aberdeen
Asset Management <ADN.L> at a loss, making Aberdeen the largest
listed UK fund company. Aberdeen shares surged 14.6 percent,
while Credit Suisse was up 2.2 percent.
Defensive pharmaceuticals shares rose. GlaxoSmithKline
<GSK.L> was up 2 percent, while AstraZeneca <AZN.L> rose 2.2
percent, taking its gain for the year to about 30 percent,
making it one of the best performers in 2008.
"At least we're ending the year on an upbeat note," said
Mike Lenhoff, chief strategist and head of research, at Brewin
Dolphin. "And I think that's the way we will start 2009. We've
been through a year that has been unrewarding, in every aspect.
"I think we'll move ahead a bit in the new year, and then
stabilise for a while. Global policymakers are doing their
upmost to ensure the recession doesn't degenerate into a
deflationary malaise."
(Additional reporting by Brian Gorman; Editing by Erica
Billingham)
