* FTSEurofirst 300 up 1.1 pct on the day, up 13 pct on week
* Index lost 7 pct in Nov, ninth month of losses in 2008
* Cyclicals hammered; defensive pharmas surge
By Blaise Robinson
PARIS, Nov 28 (Reuters) - European stocks ended higher on
Friday, as buoyant pharmaceutical shares eclipsed a drop in
cyclical mining and industrial sectors hit by renewed economic
fears, while energy shares tumbled along with oil.
The FTSEurofirst 300 <> index of top European shares
closed 1.1 percent higher at 862.07 points.
Although it gained 13 percent during the week, the index
dropped 7 percent in November, recording a ninth month of losses
in what has been a torrid 2008 for equities worldwide.
Pharma stocks made strong gains on Friday, with
GlaxoSmithKline <GSK.L> up 5.1 percent and Sanofi-Aventis
<SASY.PA> up 4.5 percent. Novartis <NOVN.VX>, whose CEO said the
company could increase its dividend and also resume share
buybacks once it has reduced its debt, gained 4.4 percent.
The sector rallied after the publication of a
long-anticipated EU report on generic competition. Although
Competition Commissioner Neelie Kroes said preliminary results
showed competition in the pharmaceuticals industry "does not
work as well as it should", traders said the absence of specific
penalties in the report brought some relief to pharma stocks.
Energy firms such as Total <TOTF.PA> and BP <BP.L> dropped
0.7-2.6 percent as oil prices <CLc1> sank below $52 a barrel on
signs OPEC would defer cutting production when it meets this
weekend in Cairo.
Industrials were also among the biggest losers, with Siemens
<SIEGn.DE> down 3.8 percent and Alstom <ALSO.PA> down 6 percent.
Despite the market's recovery during the week, analysts
remain wary about a potential "Christmas rally" this year.
"The volatility is not about to come down immediately. The
economic newsflow is just too horrible. It's too early to call
for a straight market rally at this point," said Arthur van
Slooten, strategist at Societe Generale, in Paris.
"With deflation fears, risky assets have been pricing in the
worst. But it doesn't mean that all of a sudden, from now on you
have a straight way up. We know that the newsflow will be
terrible, but we need at least some sort of indication that the
bottom is maybe in sight," he said.
"Next year's first quarter will really look awful in terms
of macro data and with analyst further downgrading their
estimates and companies finally becoming realistic in their own
guidance. That in itself could provide us with a sound basis to
build from there."
Miners took a beating on Friday, adding to recent sharp
losses. Anglo American <AAL.L> shed 2.4 percent and Xstrata
<XTA.L> dropped 3 percent.
Prices for copper, a key industrial metal, slipped as
tumbling industrial production data from Japan highlighted bleak
prospects for demand in an oversupplied market, while prices for
aluminium also fell, hit by the rising fears about the health of
the embattled auto sector.
"There is little doubt that the outlook for metals demand is
grim for at least the next few quarters and prices have fallen
to levels that reflect market expectations for further stock
increases," Barclays Capital said in a note.
Automakers lost ground, with Volkswagen <VOWG.DE> down 5
percent, BMW <BMWG.DE> off 3.4 percent and Renault <RENA.PA>
down 4.8 percent.
"Going into the weekend, one can't help but worry that we
are only a heartbeat away from the next scare story," said Chris
Hossain, senior sales manager at ODL Securities.
"The markets appear to have been buoyed by the feeling that
the U.S. will be bailing out the auto industry, but one has to
wonder how much more the global governments can continue to
support troubled industries," he added.
Around Europe, Germany's DAX index <> eked out a gain
of 0.1 percent, UK's FTSE 100 index <> rose 1.5 percent and
France's CAC 40 <> added 0.4 percent.
(Additional reporting by Dominic Lau in London; Editing by
David Cowell)
