* FTSEurofirst 300 up 0.7 percent; hits 27-month high
* Miners, chemical shares feature among top gainers
* Trading volumes remain low as year end approaches
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, Dec 21 (Reuters) - European shares hit a 27-month
high in holiday-thinned trade on Tuesday, with record high
copper prices on supply concerns helping mining stocks.
The stock market was also supported by China saying it
backed steps taken by European authorities to tackle the
region's debt problems. North Korea's promise to a U.S. envoy to
allow in U.N. inspectors also helped. []
Appetite for risky assets grew, with the VDAX-NEW volatility
index <.V1XI> falling 2.6 percent to trade near last week's
32-month low. The lower the index, the higher the market's
desire to buy riskier assets such as equities.
At 0902 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.7 percent at 1,141.12 points after
rising up to 1,142.08 -- the highest since September 2008. It is
up 9 percent this year after surging 26 percent in 2009.
Miners were among the top gainers, with the STOXX Europe 600
basic resources index <.SXPP> up 2 percent. BHP Billiton <BLT.L>
rose 1.9 percent, while Rio Tinto <RIO.L> gained 2.2 percent.
"Tensions in Korea seem to have eased a little bit and that
may be adding to sentiment. On balance, we had reasonably good
economic figures from the United States and corporate earnings
generally have been above expectations," said Keith Bowman,
equity analyst at Hargreaves Lansdown.
"But there is not a great deal of direction in the market
due to relatively lower volumes."
Volumes on the FTSEurofirst 300 were 11.5 percent of the
three-month daily average.
STOCKS CHEAPER
European stocks continued to trade at relatively cheap
levels, with the average price-to-earnings ratio for the STOXX
600 <> at 10.9, below the 10-year average of 13.8,
according to Thomson Reuters Datastream.
The technical picture also improved. The Euro STOXX 50
<>, the euro zone's blue-chip index, hovered above its
50-day moving average and a 38.2 percent Fibonacci retracement
of a major fall to a trough in 2009 from a high in 2007.
"The most important reason for the move, however, is
seasonality," said Philippe Gijsels, head of research at BNP
Paribas Fortis Global Markets, in Brussels.
"This is the traditionally best season of the year. On top
of this, active money managers have had one of the worst years
in history. So, they try to play catch-up and buy every dip. We
expect markets to remain well supported into the New Year."
Chemical shares gained, with the sector index <.SX4P> rising
1.1 percent. DSM <DSMN.AS> and Akzo Nobel <AKZO.AS> gained 4
percent and 2.2 percent respectively as KBC raised its price
target for DSM and upgraded Akzo to "buy" from "accumulate".
DSM said it was buying Martek Biosciences Corp <MATK.O> for
$1.09 billion to specialise further in the niche food nutrition
industry. []
Moody's Investors Service said it may cut debt-laden
Portugal's A1 rating by one or two notches after a review that
will take no more than three months. []
Among individual shares, UPM-Kymmene <UPM1V.HE> climbed 6
percent. The forestry group is to buy debt-laden Finnish paper
maker Myllykoski and partner Rhein Papier in a 900 million euro
deal, bringing much needed consolidation to Europe's paper
industry. []
(Editing by Dan Lalor)
