European shares rise, EU meeting eyed

2010-12-16 13:39

London - European shares were higher on Thursday, with gains limited ahead of a European Union leaders meeting, while BP fell after the United States launched a legal battle against the company over the Gulf of Mexico oil spill.

Trading was expected to be volatile due to "quadruple witching", the expiry of index and individual stock futures and options.

By 11:51, the pan-European FTSEurofirst 300 index of top shares was 0.4% higher at 1 131.58 points, after ending its longest winning run in six months on Wednesday.

"Spain is going to be the issue, with the threat of a downgrade, investors will be looking for comments from the EU meeting," Will Hedden, a sales trader at IG Index, said.

"We do not want Spain to get bailed out. If it does, it sends a big message to investors that if an economy as big as Spain is fragile, then the euro-zone may be a risky place to do business."

European Union leaders meet on Thursday for a two-day summit, which aims to tackle the debt crisis that has enveloped Greece and Ireland and threatens to spread to Portugal and Spain.

However, Spain sold €2.4bn of government bonds on Thursday, clearing its final supply hurdle of the year with a solid auction that had been billed as a test of sentiment towards the euro zone's higher-yield issuers.

Spain's IBEX 35 was 0.2 % higher, but Portugal's PSI 20 and Italy's benchmark both fell 0.2%. The Peripheral Eurozone Countries Index was 0.2% higher.

On the downside, BP fell 2.1% after the Obama administration on Wednesday launched a legal challenge against the company and its partners over the worst offshore oil spill in US history.

On the upside, technology stocks featured among the best performers, with the STOXX Europe 600 Technology 0.7% higher. Mobile network equipment maker Ericsson rose 4.5%, with analysts attributing the gain to a positive note from Handelsbanken.