European shares rise for sixth week in seven as Nokia gains

European shares touched a 10-month high on Friday on optimism for a global economic recovery and with Nokia and results from US bellwethers boosting the technology sector.

The FTSEurofirst 300 index of top European shares rose one per cent to 978.34 points. Over the week, the index climbed 1.2 per cent, its sixth weekly gain in the last seven weeks.

Britain's FTSE 100 index closed 0.8 per cent higher. It has gained 6.5 per cent in August. The London market was closed yesterday for the Bank Holiday.

The European benchmark index is up more than 51 per cent from its lifetime low of March 9, as investors have become more confident on the prospects of economic recovery.

"Things look good for the time being, but the higher we go the more we could be setting ourselves up for a disappointment," said Andy Lynch, a fund manager at Schroders.

"The world economy is doing well, French and German GDP are positive, but that's not surprising given the amount of stimulus being pumped into the market. I have a concern about what happens when the sugar rush is withdrawn, though that may be a problem for 2010, rather than now."

Nokia rose 3.1 per cent, taking its gain in the last three sessions to 9.9 per cent, with traders citing positive momentum following the announcement of its first Linux phone to compete with Apple's iPhone.

STMicroelectronics rose 12.4 per cent after a bullish note on the chipmaker from Banc of America-Merrill Lynch, which raised its price target for the stock by 17 per cent to €7, and retained its "buy" rating.

The sector was further boosted by upbeat statements from US bellwethers. Intel raised its third-quarter outlook and results at Dell were ahead of forecasts.

Macroeconomic news was also mostly positive. US consumer spending rose as expected in July, lifted by the government's "cash-for-clunkers" programme that fuelled demand for cars. The Commerce Department said spending rose 0.2 per cent after rising by a revised 0.6 per cent in June, previously reported as a 0.4 per cent gain.

The European benchmark had risen to a 10-month high of 986.59 before gains were tempered by Reuters/University of Michigan surveys showing US consumer confidence falling to its lowest level in four months in August on worries over high unemployment and dismal personal finances.