European shares steadied near 18-month highs on Friday, lifted by chemicals group AkzoNobel and carmaker Daimler, and many traders expected a further gradual rise before the year-end.
Uncertainty over talks in the United States to avoid growth-curbing austerity measures has kept equity markets within a tight range this month.
However, data on Friday which showed that China's manufacturing sector expanded in December at its fastest pace in 14 months spurred hopes of better world growth and improved sentiment towards equities.
The pan-European FTSEurofirst 300 index was flat at 1,134.94 points by around midday, recovering from a 0.4 percent fall in the previous session and edging back towards an 18-month high of 1,141.32 points reached earlier this week.
The euro zone's blue-chip Euro STOXX 50 index rose 0.1 percent to 2,631.07 points.
German group Daimler gained 2 percent to add the most points to the FTSEurofirst 300 index and contribute to Germany's DAX equity index rising 0.3 percent to 7,600.86 points.
The company has made a push to revive its China sales, and traders said the stock was up on hopes that it could benefit from an improvement in the Chinese economic outlook and outperform its rivals.
“Companies are increasingly gaining market share outside Europe,” said DWS Investments European equity fund manager Henning Gebhardt.
Gebhardt said the DAX could rise to record levels in 2013, and Central Markets senior broker Joe Neighbour felt it could end 2012 at around 7,700 points at the very least.
“Every minor dip is bought up pretty quickly afterwards. I can't really see any big sell-off between now and the end of the year. I expect the markets to continue to grind higher,” he said.
AKZO GIVES CHEMICALS HIGH
Dutch company AkzoNobel was the best-performing stock on the FTSEurofirst 300, rising 5.5 percent on plans to sell a north American unit to PPG Industries for $1.1 billion.
“We see this disposal as a likely trigger event for the stock, removing as it does one of the most troublesome sources of poor returns within the group,” Canaccord Genuity analysts wrote in a research note, keeping a “buy” rating on Akzo.
Many investors have been reluctant to take on big, new positions before the year-end, due to uncertainty over the US “fiscal cliff” - a combination of government spending cuts and tax rises that could hit the US economy next year.
However, Tavira Securities head of trading Toby Campbell-Gray said investors were still favouring equities over other asset classes such as cash or government bonds, where returns have been hit as central banks cut interest rates to record lows to stimulate a weakening global economy.
“Whether the equity market goes up, down or sideways, people are still looking to buy it. We've got institutions coming in, and they're net buyers, not sellers,” said Campbell-Gray. - Reuters