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DAX nears record high as European shares march on

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[MILAN] European shares climbed on Thursday, helped by gains among industrials and commodity stocks, while German blue chips came within striking distance of their all-time highs.

The pan-European Stoxx 600 rose 0.5 per cent to 380.4 points, its highest level in nearly 16 months, while Germany's DAX added 0.4 per cent to 12,256 points, just 1.1 per cent below a record high hit almost two years ago.

Traders said investors were growing confident about prospects for the region's stocks as the economy improves, offsetting political jitters ahead of elections in France and Germany and Britain's divorce from the European Union.

"Chances of a new all-time high is attracting investors and luring them into buying more shares," said QC Partners wealth manager Thomas Altmann, referring to the steady gains seen in the German blue chip index.

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"Risks are completely ignored. At the same time, Brexit negotiations can lead to unpleasant surprises at any time," he cautioned.

European shares have risen more than 18 per cent since the lows hit in June last year in a rally that has been supported by improving economic data, brighter earnings and expectations of a big fiscal stimulus in the United States.

"Several factors have combined to convince us that it would be wise to reinvest in European equities and to do so immediately," Geoffroy Goenen, Head of Fundamental Europe Equity Management at Candriam, said in a note.

Mr Goenen said that once the French elections are over he expects global investors to reinvest massively in the region.

Europe's basic resources index was the biggest gainer on Thursday, up 1.6 per cent, supported by higher metal prices and gains among heavyweight miners Glencore, Rio Tinto and Anglo American, which rose between one per cent and 2.3 per cent.

The oil and gas index also rallied, up 1.2 per cent, after crude oil prices jumped after Kuwait gave its backing for an extension of Opec production cuts in an attempt to reduce global oversupply. The index has been the worst performer in Europe so far but some investors believe the sell-off is overdone.

UK oil explorer firm Tullow Oil was the biggest gainer in its sector and on the broader Stoxx index, ending up 7.7 per cent.

Gains among industrial stocks also provided support with Germany's Siemens up 1.5 per cent, France's Saint Gobain and Schneider Electric up 2.1 and 1.1 per cent respectively.

Among the fallers was H&M, which fell more than 4 per cent, close to four-years lows, following a strong open.

The retailer posted a smaller-than-expected fall in pretax profit for the first quarter but analysts voiced concerns over its rising inventory levels, as well as a revolving credit facility.