* Top-300 index up 0.3 percent, rises 1.2 percent in August
* HBOS and Carrefour leading gainers; Nokia biggest loser
* Economic data mixed; strategists wary on market prospects
By Peter Starck
FRANKFURT, Aug 29 (Reuters) - European shares rose for the
fourth straight day on Friday, led by UK bank HBOS <HBOS.L> and
French retailer Carrefour <CARR.PA>, while Finnish mobile phone
maker Nokia <NOK1V.HE> was the biggest blue-chip loser.
But economic data was mixed on both sides of the Atlantic
and equity strategists saw scant scope for stock markets to
rally.
"We still see no clear trigger for a sustained recovery,"
UniCredit's Gerhard Schwarz said, citing the ongoing credit
crisis, inflationary pressures and downward revisions to
corporate earnings estimates.
"We expect more negative news from the financial industry
and on the economic outlook front in coming weeks and months and
that is not going to calm the nerves of investors," said
Heinz-Gerd Sonnenschein, equity strategist at Postbank.
LandesBank Berlin said fundamentals and chart-technical
signals pointed to continued volatility in euro zone stock
markets, making possible a test of year-lows hit in mid-July.
On Friday the FTSEurofirst 300 <> index of top
European shares closed 0.3 percent higher at 1,194.73 points.
The index advanced 1.2 percent for the month, August marking
only its second month of gains in the last 10.
It is down 21 percent this year, hurt by bank writedowns, a
slowing economy and uncertainty over interest rates.
Mortgage lender HBOS <HBOS.L> led Friday's rise, putting on
3.4 percent amid market talk it was about to sell its Australian
operation, traders said. HBOS declined to comment.
Dutch-Belgian financial group Fortis <FOR.AS> rose 2.8
percent and Royal Bank of Scotland <RBS.L> added 2.1 percent.
Carrefour <CARR.PA> shot up 7.2 percent after the French
group met key profit expectations for the first half and stood
by its 2008 forecasts. The DJ Stoxx European retail index
<.SXRP> climbed 1.5 percent.
Nokia <NOK1V.HE> fell 2.2 percent, with traders citing an
upcoming change in a key MSCI index, which is likely to trigger
selling, and gloomy comments from rival Samsung <005930.KS>.
Global equities rose sharply on Thursday after news that the
U.S. economy grew more than expected in the second quarter.
MIXED BAG
Data on Friday showed business activity in the U.S. Midwest
expanding at a far more robust rate than expected in August, and
U.S. consumer confidence rising to a five-month high.
But U.S. personal income tumbled unexpectedly in July,
registering its sharpest decline since a August 2005 -- and
spending slowed as the effects of a government stimulus wore
off.
In the euro zone inflation slowed more than expected in
August but economic sentiment worsened more than forecast,
underlining concerns the area may be heading for a recession.
"Economic growth in the euro zone should suffer not only in
the coming months but also far into 2009," Raiffeisen Bank said.
"The problems in the financial sector are far from over and
a rapid recovery isn't in sight," the Austrian bank said,
adding: "Earnings expectations should further come down in the
course of the year and weigh on European stock markets."
Dutch bank ING, in an equity strategy note on European
second-quarter corporate earnings, said: "The overall theme is
still 'bad, but could have been worse'." Among sectors,
defensives and late cyclicals had done well, while financials
and consumer cyclicals continued to disappoint, ING said.
The third-quarter reporting season "is shaping up to be very
poor indeed" and the second half of 2008 "is likely to have the
weakest earnings delivery in this downcycle," JPMorgan said in a
European equity strategy note.
Europe's stock markets would only recover once the European
Central Bank (ECB) has won its battle against inflation and
starts devoting its policy to growth, brokerage Steubing said.
Euro zone inflation fell more than expected, to 3.8 percent
year-on-year in August, but remains way above the ECB's
2-percent target. The ECB meets on interest rates next week.
Danske Bank said it expects ECB President Jean-Claude
Trichet on Sept. 4 to "stress that the downside risks to growth
in Euroland have become increasingly evident, but that inflation
is still very high and above the ECB's target."
A euro zone rate cut debate could erupt in early 2009 in
response to a further fall in inflation, Bank of America said.
"However, if leading indicators and the euro zone economy
start to recover in early 2009, helped by a less overvalued euro
and less elevated oil prices, the ECB will probably stay on
hold. This remains our main scenario," Bank of America added.
ABN AMRO estimated that the ECB would need another two to
three quarters of weak data before taking action. "If the
pessimists are wrong and growth rebounds the ECB might yet hike
rates further," ABN AMRO said.
(Additional reporting by Sitaraman Shankar in London; Editing
by Greg Mahlich)
