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Thursday, November 25, 2010

European Stocks Advance; Ireland Falls Again

The main European equity markets advanced Thursday as a strong finish on Wall Street offset worries about sovereign debt in peripheral euro-zone countries.

The Stoxx Europe 600 index rose 0.5% to 267.72.

The gains came after a strong session for stocks on Wall Street, which continued to rally into the closing bell after well-received economic data.

U.S. markets will be closed Thursday for the Thanksgiving holiday, which was also reflected in low trading volumes across Europe.

The U.K.'s FTSE 100 closed up 0.7% to 5,698.93 as gains for real-estate stocks and some miners helped lift the index.

Shares in Anglo American rose 2.7%.

Shares in Capital Shopping Centres Group were the biggest gainer in the FTSE index, climbing nearly 13% after the company said it had received a preliminary approach from Simon Property Group Inc.

The potential bid also provided a lift for other real-estate companies.

Hammerson rallied 4.8% and British Land gained 2.4%.

Among the other major indexes, Germany's DAX 30 rose 0.8% to 6,879.66 as car makers BMW and Volkswagen both rose around 1%.

The French CAC 40 index gained 0.3% to 3,760.42.

Brian Gallagher, an analyst at Dolmen Stockbrokers, said investors are still using dips in the market to buy stocks that have the most exposure to high-growth emerging markets, including miners, German industrial stocks and car makers.

But the picture in the rest of Europe was weaker.

The Irish ISEQ index fell 1.2% and Spain's IBEX 35 index slipped 0.2%.

Gallagher said there is still a lot of uncertainty in Ireland over whether corporation-tax levels will be increased and this is hurting some otherwise relatively strong Irish companies.

There is also continued skepticism over whether the country can keep up with payments under a bailout.

"People are just looking at the numbers and saying we can't afford to pay back that amount of debt at 5%," he said.

Among Irish stocks in the red Thursday, shares in airline Ryanair Holdings dropped 0.7%.

Banks across Europe were also mostly weaker as debt problems continued to weigh on sentiment.

Credit Suisse Group dropped 0.3%.

Also Thursday, LCH.Clearnet again increased the margin required for positions in Irish sovereign debt.

The margin now stands at 45%, having risen gradually from 3% as the debt crisis unfolded.

Among some of the other fallers in Europe, shares in newspaper publisher Daily Mail & General Trust dropped 3.5% in London after the group reported its earnings for the latest fiscal year.

The figures were largely in line with or ahead of market expectations, but analysts said a change to the group's accounting policy starting in fiscal 2011 could be a concern and would have cut around 7% from its earnings in fiscal 2010.

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