European shares end 2013 on high

European shares yesterday rose to mark a positive end to 2013, with pan-European indexes posting their best annual gains since 2009 and many investors forecasting more progress next year.

Although the stock market rally still faces risks from factors such as a possible spike in bond yields or a rise in the oil price from civil unrest in the Middle East and Africa, traders expect the gradual recovery in the world economy to continue to support equities in 2014.

France’s Cac-40 equity index closed up 0.5% at 4,295.95 points, bringing its gains for 2013 to 18% while Spain’s Ibex rose 0.2% to 9,916.70 points, with the Ibex up around 21% since the start of 2013.

The pan-European FTS- Eurofirst 300 index was up 0.3% at 1,315.22 points, while the eurozone’s blue- chip Euro Stoxx 50 index rose 0.3% to 3,109.02 points.

Both those indexes reaped gains of 16% and 18% respectively for 2013, their best year since 2009, after signs of economic recovery and along run of cheap central bank money fuelled a stock market revival.

The rally in Europe has lagged bigger gains in US and Japanese stock markets in 2013, and some traders and investors felt ongoing divergences between European economies could lead to more relative under-performance next year.

Overall, European shares have rallied as investor worries over the eurozone’s debt crisis abated, and the ECB and the US Federal Reserve injected liquidity into financial markets.

“Gains have been pretty solid in 2013, but compared with Wall Street which is trading at record highs, Europe still has a nice catch-up rally just to go back to 2007 levels,” a Paris-based trader said.

— Reuters