European shares higher

Published December 7, 2007

LONDON, Dec 6: Europe’s main equity markets rose on Thursday amid investor caution before British and European interest rate decisions, with the banking sector in the spotlight, dealers said.

In morning trade, London’s FTSE 100 index of leading companies added 0.12 per cent to 6,501.30 points. In Paris the CAC 40 won 0.33 per cent to 5,677.85 and Frankfurt’s DAX 30 gained 0.24 per cent to 7,963.85 points.

The DJ Euro Stoxx 50 index of top eurozone shares increased by 0.36 per cent to 4,425.95 points.

The European single currency stood at 1.4572 dollars.

US shares had rallied sharply Wednesday on upbeat economic news and as media reports suggested the administration of President George W. Bush was close to unveiling a major mortgage rescue plan.

In Europe, all eyes were on the Bank of England and the European Central Bank, which are due to make their interest rate announcements at 1200 GMT and 1245 GMT respectively.

While the ECB is widely forecast to freeze rates at 4.00 per cent, speculation is growing that the BoE could deliver a quarter-point cut to 5.50 per cent.

Global equities were also boosted by expectations of another interest rate reduction from the US Federal Reserve next week, dealers said.

In London on Thursday, Britain’s Royal Bank of Scotland said it will write off 1.25 billion pounds (1.74 billion euros, 2.53 billion dollars) from exposure to the US subprime home loan crisis and the global credit crunch.

However, RBS shares surged 5.53 per cent to 491.5 pence as investors were reassured that the writedowns were not as bad as expected, dealers said.

Other European banks also chalked up gains.—AFP

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