Europe: Shares rise to three-month high in thin trade

[LONDON] European shares hit three-month highs on Thursday, rising in thin trade as expectations grew for aggressive European Central Bank (ECB) action next week.

A solid quarterly report from chipmaker Infineon and a rebound in metal prices also provided support.

The pan-European FTSEurofirst 300 index closed up 0.9 per cent at 1,516.25 points, its highest level since August.

However, volumes were just 65 per cent of its 90-day average. Wall Street was closed for the US Thanksgiving holiday.

The euro edged towards seven-month lows against the dollar as investors bet that the ECB would ease policy again in December. "Expectations surrounding the ECB are running very high and this is driving European markets higher, weakening the euro and helping them do better than US stocks," Cassa Lombarda head of research and investment, Marco Vailati, said. "I think and hope the ECB will not disappoint but I realise that it won't be that easy." Infineon climbed 12.9 per cent after the chip maker posted higher-than-expected quarterly operating results and promised an increase in revenue for its latest financial year at the high end of analysts' expectations. "Infineon has proven surprisingly resilient and is executing very well," Kepler Cheuvreux analyst, Bernd Laux, said, keeping his "hold" recommendation. "Based on its new guidance, the shares are not expensive any more." The company also proposed a higher-than-expected dividend increase to 0.20 euro a share.

The bullish update boosted other chipmakers, with STMicro up 5.4 per cent and Dialog Semiconductor up 4 per cent.

Remy Cointreau fell 3 per cent after reporting a 7.3 pct fall in like-for-like current operating profit in the first half, reflecting soft Chinese demand for its premium cognac.

Sector peer Royal UNIBREW, rose 7.7 per cent after reporting quarterly results above analysts' expectations and raising its medium-term core profit target.

Shares in renewable-energy firm Abengoa slumped for a second day as insolvency proceedings continued. A potential investor backed out of a 350-million-euro deal to recapitalise the company. The stock was down 30 per cent, after half its market value was wiped out on Wednesday.

Mining stocks were among the top gainers, rising 2.1 per cent, as base metals prices rallied after falling to multi-year lows this week.

Auto stocks were also in demand, with the sector index up 2.3 per cent, benefiting from weakness in the euro.

The sector was also helped by gains in Volkswagen, which rose 3.5 per cent, its tenth straight day of gains.

Baader Bank Helvea confirmed its "hold" rating on the stock and said it remained cautious because of uncertain costs around VW's emissions scandal.

REUTERS