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Europe: Shares find fuel ahead of Catalan election outcome, holiday

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[LONDON] Financials led European stocks higher on Thursday in a reversal of earlier losses after a muted response to the approval by the US Congress of a long-anticipated tax overhaul, while a vote in Catalonia remained in focus.

The pan-European Stoxx 600 index ended the session with a 0.6 per cent gain, with Britain's FTSE hitting a record, up 1.1 per cent. Trading volumes were thin, however.

Gains were broad-based, with almost every European sector in positive territory. Health stocks, consumer staples and financials added the most points, while energy and materials also helped.

David Madden, market analyst at CMC Markets UK, put the rise down to investors winding down their positions ahead of the Christmas holiday with volatility remaining low.

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Spain's IBEX was up 1 per cent, shrugging off any jitters over a regional Catalan election in Spain.

The Spanish government hoped Thursday's election would strip pro-independence parties of their control of the Catalan parliament.

Shares in Spanish banks Caixabank, Sabadell and Santander all gained between 1.5 per cent to 2.1 per cent.

"While our base case remains that a negotiated settlement will be reached over the Catalan political situation, the risk we see is that it could take months rather than weeks to deliver such agreement, disappointing market expectations," analysts at Jefferies said in a note.

Elsewhere the US 1.5 trillion dollar tax bill, which has been a focus for equity markets this year, saw its final approval largely shrugged off by European equities.

Henry Croft of Accendo Markets described it as "a widely touted 'buy the rumour, sell the fact' event" and said investors were now focused on whether the tax reform would boost equities in 2018.

Other analysts believe investors will need time to crunch the data and figure out which companies will benefit the most.

"As people sharpen their pencils and figure out which companies will benefit (from the tax bill), and companies start talking about that themselves, I think we'll see larger moves in share prices," said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston.

While corporate news was scarce with the end of the year nearing, Nokia was among the best performers on the Stoxx 600, rising 4 per cent after announcing a patent agreement with China's Huawei.

Scandal-hit Steinhoff saw a volatile trading session, ending 0.7 per cent higher after falling as much as 17 per cent earlier in the session.

Heavily indebted telecoms and cable group Altice, also enjoyed a gain of 1.5 per cent. Citigroup analysts lowered their price target but kept an overall "buy" rating on the stock, which has slumped more than 55 per cent so far in 2017 due to concerns over its 50 billion euro debt pile.

REUTERS