* FTSEurofirst 300 closes 0.3 pct higher; falls in week
* Vedanta Resources drops on Cairn India deal news
* Delhaize falls as it cuts outlook
* Aviva surges on RSA approach talk
By Brian Gorman
LONDON, Aug 13 (Reuters) - European shares made modest gains
for a second straight day on Friday, but finished lower for the
week as investors continued to worry about the strength of the
economic recovery.
The pan-European FTSEurofirst 300 <> index of top
shares rose 0.3 percent to close at 1,045.65 points, having
moved in and out of positive territory during the session. Over
the week, the index fell 1.1 percent, its biggest decline in six
weeks.
Delhaize <DELB.BR> plunged 11.2 percent after the Belgian
supermarket group cut its 2010 outlook. []
Economic data was mixed. European economic growth
accelerated sharply in the second quarter of 2010 as Germany's
best performance since reunification more than made up for the
struggles of Spain, Ireland and recession-ravaged Greece.
[]
U.S. retail sales rebounded in July but showed hints of
lingering economic softness, as did inflation data showing
underlying price pressures stuck at their lowest level since the
1960s. []
U.S. consumer sentiment appeared to have stabilized in
August following a sharp drop in July, while business
inventories rose more than analysts had been expecting.
Analysts played down the significance of the rally in
equities over the last two sessions, with trading volumes for
the European benchmark less than 70 percent of their average for
the last 90 days.
"Volumes are pitiful," said Andy Lynch, fund manager at
Schroders. "Price discovery is pretty limited. The next movement
is probably down. The American recovery is still in doubt ...
It's all rather depressing."
Across Europe, the FTSE 100 <> index ended the day 0.l2
percent higher; Germany's DAX <> and France's CAC 40
<> fell 0.4 and 0.3 percent respectively.
Wall Street was slightly lower around the time European
bourses were closing. The Dow Jones <>, S&P 500 <.SPX> and
Nasdaq Composite <> were down between 0.1 and 0.5 percent.
AVIVA SURGES
Aviva <AV.L> rose 5.5 percent following a report that the
insurer had rejected a 5 billion pound ($7.79 billion) offer
from RSA <RSA.L>, which fell 0.9 percent. Aviva declined to
comment on the report.
Most other UK insurers rose, with Legal & General <LGEN.L>
and Standard Life <SL.L> up 3.2 and 3 percent respectively.
Vedanta Resources <VED.L> fell 5.9 percent, taking its
decline over four days to more than 20 percent, as sources said
the company was close to finalising a deal to buy a majority
stake in Cairn Energy's <CNE.L> Indian unit, Cairn India
<CAIL.BO>. Cairn Energy rose 3.4 percent.
Defensive sectors were generally among the best performers.
GlaxoSmithKline <GSK.L> rose 2.4 percent, extending gains from
Thursday, when it was announced that U.S. advisers had
recommended approval of Potiga, a new epilepsy drug.
Portugal Telecom (PT) <PTC.LS> rose 1.2 percent, after
ratings agency S&P said: "We are affirming the 'BBB/A-2' ratings
on PT, and removing them from CreditWatch with negative
implications."
Worries about debts in Europe's peripheral economies
resurfaced. Italy's bond sale drew lower bid/cover ratios
compared with the previous sales in July and May respectively.
[]
"There are still underlying debt problems. In the Italian
bond auctions the bid cover/ratios were disappointing," said
Giuseppe-Guido Amato, Lang & Schwarz strategist. "Earnings
season is now flattening out and equities have not got the
momentum to break to the upside."
(Additional reporting by Joanne Frearson; Editing by Sharon
Lindores)
($1=.6415 Pound)
