European shares extend winning run to four days

European shares edged higher yesterday, to extend a winning run to four days, as gains for defensive stocks offset a decline in banks.

The FTSEurofirst 300 index of leading European shares inched up 0.02 per cent to close at 1,018.45 points. The index was up for the fourth day, the longest winning streak in a month.

The index went in and out of positive territory several times in the final minutes of trading.

The European benchmark is up more than 57 per cent from its lifetime low of March 9, as investors have seen several major economies emerge from recession.

Greek bank shares were under pressure, with analysts citing concerns about the government failing to announce tougher measures to shore up the country's finances. National Bank of Greece, EFG Eurobank and Bank of Piraeus lost between 4.8 and 4.9 per cent.

Other banks to fall included Barclays, Credit Suisse, HSBC, and Société Générale, down between 1.3 and 2.5 per cent.

Around Europe, Britain's FTSE 100 index ended the day 0.6 per cent lower; Germany's DAX index and France's CAC 40 edged up 0.2 and 0.1 per cent, respectively. The banking sector was also hit by a report that Austria's top cooperative bank, Oesterreichische Volksbanken, had been put on a watch list by the country's central bank and its financial market regulator.

The Austrian bank said the report was inaccurate and it was at no risk of nationalisation.

Economic news from the US was mostly downbeat. US producer prices rose faster than expected in November, while a gauge of manufacturing in New York state unexpectedly fell this month, creating a potential headache for the Federal Reserve.

"They're both leading indicators, and it's not a nice combination," said Philip Lawlor, strategist at Nomura in London.

He added: "Having said that, we're in thin trading, and you have to take the volatility with a pinch of salt.

"Inflation, or fears of inflation, could be the story next year. Exit strategies are key. Are central banks going to be ahead of the curve, or are they going to wait to see the whites of the eyes of inflation?"