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Europe: Shares post small loss for 2016, Britain's FTSE hits record high

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[LONDON] European shares posted a small loss for 2016, though strong gains among mining stocks and the oil & gas sector as well as a turnaround in banks in the latter part of the year lent support, while Britain's FTSE 100 index climbed to a record high.

The pan-European Stoxx 600 index ended the session up 0.3 per cent with almost all major regional indexes higher.

Reversing steep losses from early in the year, mining stocks helped Europe's basic resources index to a 61.9 per cent gain this year, bouncing back from a 35-per cent slump in 2015.

The bounce in miners also helped Britain's FTSE 100 to gain 14.4 per cent in 2016, making it the best performer among major European stock indexes despite the shock of June's Brexit vote.

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The index, dominated by global firms, has been boosted by a sharp drop in sterling after the referendum and the resilience of the economy.

"The latest GDP figures point to a strong UK economy which has probably accounted for some of the pick-up in equity prices overall since the referendum," KPMG UK's head of macroeconomics, Yael Selfin, said.

The second half of the year also saw a sharp rebound in banking stocks as an improving global economic outlook, a rising US interest rate environment and expectations of a lower level of regulation in the United States after Donald Trump's presidential election win prompted investors to buy cyclicals.

The European banking index rose 12 per cent in the third quarter and has surged 21.5 per cent so far in the fourth quarter, after sinking 20 per cent in the January-March period of 2016 and falling 13 per cent in the second quarter.

The banking index, which fell about 35 per cent in the first half to become the worst sectoral performer, is now down just 6.8 per cent for the year. Telecoms have now fallen to the bottom of the list, falling 15.8 per cent this year.

Across Europe, the Stoxx Europe 600 index is down 1.2 per cent this year, reflecting political uncertainties in the region and concerns about the Italian banking industry.

Italy's benchmark FTSE MIB is down about 10 per cent, among the worst performers in Europe, following a 38 per cent slump in the bank sector this year.

Germany's DAX has risen 6.9 per cent in 2016, while France's CAC is up 4.9 per cent. However, Spain's IBEX has fallen 2 per cent.

On Friday, the Stoxx 600, the FTSE 100, the DAX, the CAC and the Ibex ended down between 0.3 per cent and 0.5 per cent.