Prospects of a further dose of loose central bank policies kept European shares around five-year highs yesterday, with gains in Vivendi after an earnings beat buoying media stocks.

The French media and telecoms conglomerate rose three per cent to the top of the FTSEurofirst 300’s and was tipped to rise further. “I would certainly consider buying Vivendi. I see between six to eight percent upside left in it,” said JNF Capital investment adviser Edward Smyth.

The pan-European FTSEurofirst 300 index closed up 0.3 per cent at 1,297.85 points, moving closer to the five-year high of 1,316.42 points reached on November 7. It also secured a sixth straight week of gains, albeit the smallest during that run.

European equities were supported by loose monetary policies across the developed world, with the Euro STOXX 50 climbing 17 per cent since the start of 2013 and the FTSEurofirst 300 14 per cent.

US Federal Reserve chairman-designate, Janet Yellen, on Thursday defended the central bank’s $85 billion-a-month bond-buying programme, which has stoked investor demand for riskier assets such as equities.

But investors must also weigh the benefits of a cheap flow of dollars against a stream of bleak economic news from the eurozone.

The European Central Bank last week cut interest rates to a record low of 0.25 per cent to stave off deflationary pressures and stimulate growth, and the third quarter earnings season has been mixed.

According to Thomson Reuters StarMine data, 49 per cent of companies on the pan-European STOXX 600 index have missed expectations at the profit level, while around two-thirds have fallen short of revenue forecasts.

“Most of what those companies are suffering from is a pure currency factor, we see very few instances where they are suffering a significant drop in their orders,” said Pierre-Yves Gauthier, from Alpha Value.

“Most of the companies that have been reporting seem to confirm that they do not need to change that much in 2013. We don’t see a crisis looming in terms of confidence in equities on the basis of Q3,” he said, adding the equity market could gain another 20 per cent over the next year.

Italian stocks fell, while the country’s bond yields edged higher, with traders citing profit taking after it was warned by the EU Commission that its draft budget for next year risked breaking the rules, bringing the focus back to its high debt level.

That weighed on the eurozone’s blue-chip Euro STOXX 50 index, which was flat at 3,054.53.

Low-cost telecoms operator Iliad tumbled 4.9 per cent, making it the biggest loser on the market, after it reported slow customer growth amidst tough price competition.

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