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European stocks stable for festive break

London - Europe's main stock markets were little changed on Thursday, ahead of the Christmas break, as investors assessed modest overnight gains on Wall Street and a mixed performance in Asia.

London's FTSE 100 rose 0.16% to 5 993.17 points with the energy sector boosted as oil prices forged two-year highs this week.

Elsewhere, the Paris CAC 40 retreated 0.31% to 3 907.66 points while Frankfurt's DAX 30 index edged up 0.06% to 7 072.70 points.

The German stock market will shut down for the Christmas break later Thursday but the British and French markets will reopen on Friday for a half-day Christmas Eve session.

"The Santa rally for London's leading equities has continued this morning, with energy stocks fuelling a push higher," said Will Hedden, sales trader at financial spread-betting firm IG Index.

"A 26-month high for oil prices and cold weather driving demand for gas meant BP, BG Group and Royal Dutch Shell all benefitted early on."

The London market came within a whisker of the psychological 6 000-points level, which it has not breached since June 2008.

"The UK index very nearly breached the psychologically important 6 000 level as bull traders were able to mark the card amid low volumes," noted equities head Giles Watts at City Index.

"Germany's DAX also posted new year-highs as investors seemed reassured by easing euro debt fears."

The euro, which has been slammed this year by the eurozone debt crisis, edged higher against the dollar in muted pre-Christmas trade, as dealers digested a fresh message of support from China.

China on Thursday pledged its backing to eurozone countries and said Europe would be a "major market" for investment of Beijing's massive foreign exchange reserves.

"We are ready to support the eurozone countries to overcome the financial crisis and realise economic recovery," foreign ministry spokeswoman Jiang Yu told reporters at a regular briefing.

"In the future, the European Union will be one of the major markets for our forex investment."

China has emerged as a key player in the European debt crisis. Beijing has the world's largest foreign exchange reserves at 2.65 trillion dollars, a significant portion of which is invested in the euro.

Investor sentiment was meanwhile buoyed by news of a huge takeover in the mining sector.

Global resources giant Rio Tinto on Thursday made a $3.9bn bid for Australian coal miner Riversdale in its first major play since a failed iron ore merger with rival BHP Billiton.

Rio called the all-cash, 16 Australian dollar (US$16) per share offer "attractive" and said it already had pre-bid agreements on 14.9% of Riversdale's shares, including with a number of its directors.

"The acquisition of Riversdale is in line with our growth strategy of investing in, developing and operating large long-term cost-competitive mines and businesses," said Rio Tinto energy chief Doug Ritchie.

Riversdale has three coal mining projects in Africa, including major operations in Mozambique. Ritchie said the bid underscored Rio's commitment to the continent, including Guinea's massive Simandou iron ore field.

Asian markets were mixed on Thursday with traders winding down for the holidays while an upgrade of US economic growth provided some cheer.

Wall Street closed slightly higher on Wednesday, pulled up by financial stocks after US economic growth estimates were revised upwards and data showed the beleaguered housing market was faring better.

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