European shares rose to their highest close in 14 months yesterday, with energy stocks gaining and US home sales data boosting sentiment.
In thin trade ahead of the Christmas holiday season, the FTSEurofirst 300 index of top European shares rose 0.7 per cent to 1,034.86 points, its highest close since October 3 last year. Energy shares were among the biggest gainers, even as crude prices fell to about $73.40 a barrel, after OPEC oil producers agreed to leave output targets unchanged.
Heavyweights BP, Royal Dutch Shell and Total rose between 1.1 and 1.7 per cent.
Cairn Energy rose 6.3 per cent, building on gains from Monday when it said it had secured a rig to drill offshore Greenland. The company also undertook a 10-for-1 stock split, yesterday.
Across Europe, Britain's FTSE 100 index and France's CAC 40 both ended the day 0.7 per cent higher. Germany's DAX rose 0.3 per cent.
The European benchmark has gained more than 24 per cent this year and is up more than 60 per cent from its lifetime low of March 9, as several major economies have come out of recession.
Volumes were thin at 57.9 per cent of the 90-day average.
US economic data helped, as investors chose to focus on stronger-than-expected home sales, rather than weaker-than-expected GDP.
Sales of previously owned homes in the United States surged last month as prices continued to fall and buyers rushed to take advantage of a popular tax credit, the National Association of Realtors (NAR) said.
The US economy grew at a much slower pace than initially thought in the third quarter. The Commerce Department's final estimate showed gross domestic product grew at a 2.2 per cent annual rate instead of the 2.8 per cent pace it reported last month.
"The focus was on the homes data, which was much stronger than expected," said Philippe Gijsels, senior equity strategist at Fortis Bank in Brussels. "And the GDP is likely to be stronger in Q4."
"But there's also some window dressing going on, as we come up to the end of the year. Some fund mangers are playing catch up.