France's CAC hits 5-1/2-year high, European shares up

Reuters - UK Focus

* FTSEurofirst 300 rises 0.2 percent

* Vodafone rises 2.8 pct, top gainer

* AXA (Paris: FR0000120628 - news) slips after disappointing results

By Atul Prakash

LONDON, Feb 21 (Reuters) - European shares climbed higher onFriday, with France's CAC 40 hitting a 5-1/2-year peak,as investors took their lead from stronger equities on WallStreet and in Asia following robust U.S. factory data.

At 0901 GMT, the FTSEurofirst 300 index of topEuropean shares was up 0.2 percent at 1,341.29 points aftergaining as much as 1,345.26. the highest since late January.France's CAC was up 0.1 percent after hitting a level not seensince 2008.

Wall Street's S&P 500 gained 0.6 percent on Thursdayand Japan's Nikkei gained almost 3 percent on Friday,lifted by data showing U.S. factory activity accelerated at itsfastest pace in nearly four years in February, a bullishindicator after some disappointing data.

"It is a positive sign that the U.S. economy is improving,"David Battersby, investment manager at Redmayne-Bentley, said."And if the economy is improving, then they will be sucking inimports. Things are getting back on track."

"Look at the companies that are international brands andhave strong emerging market exposure because that's where, afterthe recent fallout, we have value," he said, adding thatcompanies such as GlaxoSmithKline (Other OTC: GLAXF - news) , Unilever (NYSE: UL - news) andDiageo (LSE: DGE.L - news) were quite attractive.

Among the top risers, Vodafone advanced 2.8 percentto the top of the FTSEurofirst 300's gainers' list as investorsbought up the stock ahead of the completion of the sale of itsstake in Verizon Wireless to U.S. peer Verizon (NYSE: VZ - news) .

The deal will tee up an $84 billion payout in cash andshares at the end of February, which many may look to reinvestin UK stocks such as Vodafone.

"Certainly holders of Vodafone tend to be institutional andwill play the re-weight somewhat by the book. Re-investment backinto the Vodafone stub itself is certainly occurring apace,"Monument Securities director Andy Ash said.

Bucking the trend, Europe's No. 2 insurer AXA fell2.5 percent after posting a lower-than-expected quarterlyprofit, while Kering (Other OTC: PPRUF - news) , owner of the Yves Saint Laurent,Bottega Veneta and Gucci brands, dropped 3.5 percent afterreporting a sharply lower full-year profit.

Despite some soft results Friday, data shows the earningsseason in Europe has been relatively positive so far.

About 60 percent of STOXX 600 companies havereported results the season, of which 59 percent have met orbeaten profit forecasts, with net profits rising 1.2 percentyear-over-year on average, Thomson Reuters Starmine data shows.

Overall, investors remained positive on European stocks,with figures showing further brisk inflows into the region.

A poll by Thomson Reuters Lipper of 102 U.S.-based fundsinvested in European equities, which include exchange-tradedfunds' (ETFs) holdings, shows the funds added $502 million intoEuropean equities in the seven-day period to Feb. 19, a 34thstraight week of net inflows - marking the longest streak ofweekly inflows since Lipper started to monitor flows in 1992.

So far this year, U.S.-based funds have added about $4.6billion into European equities.

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