* FTSEurofirst 300 index closes up 1 percent
* Kingfisher, Next jump after strong earnings
* Investors focus on European Union Summit
By Joanne Frearson
LONDON, March 24 (Reuters) - European shares rose to a
two-week closing high on Thursday, boosted by strong results
from retailers, while a Reuters poll suggested stocks were set
to rise further on corporate earnings strength.
The pan-European FTSEurofirst 300 <> index of top
shares closed up 1 percent at 1,123.52 points following early
session falls on concerns about Portugal, after its parliament
rejected planned austerity measures.
Trading volume was 104.8 percent of its 90-day average.
"Long-term we are positive, valuations are not demanding and
companies have strong balance sheets," said David Moss, director
of European equities at F&C Asset Management, which has 7.1
billion pounds ($11.52 billion) of assets under management in
Europe.
Retailers were in demand, with the STOXX Europe 600 Retail
<.SXRP> rising 1.5 percent. Kingfisher <KGF.L> jumped 7.2
percent after announcing forecast-beating full-year profits,
while Next <NXT.L> gained 4 percent following a dividend hike.
Volume was high for both companies, with Kingfisher's at
273.6 percent of its 90-day average and Next at 254 percent of
its 90-day average.
"We do not own Kingfisher, but we are looking at the
company, it is very well positioned and has strong cash
generation," Moss said.
The stocks both outperformed the FTSE 100 <> index
which was up 1.5 percent.
POSITIVE EARNINGS MOMENTUM
A Reuters poll showed positive corporate earnings would help
boost European stocks through 2011, with Germany's benchmark DAX
index <> and France's CAC 40 <> seen closing this
year around 11 percent and 13 percent higher, respectively.
[]
On Thursday Germany's DAX gained 1.9 percent and France's
CAC rose 1.4 percent.
The poll also suggested stock valuations looked cheap and
equity valuations on Thomson Reuters Datastream showed the STOXX
Europe 600 <> carrying a forward price-to-earnings ratio
of 10.2, below a 10-year average of 13.6.
In the carmaking sector, Daimler <DAIGn.DE> was in demand
after a person familiar with the matter said the company and
Rolls-Royce <RR.L> have submitted an offer of 24 euros per share
for specialty-engine maker Tognum <TGMG.DE>.
Daimler was up 3.5 percent.
However, Barclays Capital downgraded the auto sector to
"underweight" from "market weight" citing the impact on demand
of higher commodity prices and rising interest rates in the
emerging markets.
Higher oil prices historically have a negative
correlation with auto sector performance Barclays Capital
analysts said, given the demand substitution effect.
"On the costs side, rubber prices are well above all-time
highs and steel prices have also increased substantially, both
of which should hinder margin expansion," they added.
Euro zone sovereign debt issues remained in the background
and a decision on the beefed up euro zone bailout fund, which
was widely anticipated at Thursday's and Friday's European Union
summit, is now unlikely until June. []
Traders said investors had priced in a possible bailout for
Portugal after austerity measures were rejected by the
parliament and the Prime Minister Jose Socrates resigned.
Portugal's PSI 20 <> rose 1.1 percent and Spain's IBEX
35 <> gained 1.1 percent as investors shrugged aside a
Moody's downgrade of 30 Spanish banks.
($1=.6165 Pound)
(Editing by Elaine Hardcastle)
