File photo: Lee Jae-Won

London - European shares edged up to fresh five-and-a-half-year year highs on Wednesday, led by a rally in the region's periphery, with gains capped by mixed corporate news and uncertainty ahead of central bank announcements and U.S. data.

The flat overall market was underpinned by continued strong gains in Spain, Italy and Portugal as investors bet that the countries hit hardest by the euro zone crisis of recent years will now be the biggest beneficiaries of an economic recovery.

Spain's IBEX rose 0.9 percent to hit a fresh 2-1/2 year peak , while Italy's FTSE MIB gained 0.8 percent and Portugal's benchmark index rallied 1.5 percent.

“I think the periphery will generally do better than the core. This year the euro zone will get better in a whole range of ways - it's not just growth getting better, but credit conditions and confidence will be getting better, austerity will be fading,” said Daniel McCormack, strategist at Macquarie.

“...You want to be starting at the lowest point so the weaker areas will do better in terms of degree of change than stronger areas.”

Spanish and Italian stocks including Banco Popular and Intesa Sanpaolo were among the top gainers on the pan-European FTSEurofirst 300, which was up 0.1 percent at 1,321.34 points at 0845 GMT.

The benchmark rose as high as 1,321.70 points, a level last seen in June 2008 and slightly beating Tuesday's peak. But traders said investors were unwilling to place fresh big in view of a busy calendar including the U.S. private sector job reports at 1315 GMT, followed by the minutes from the Federal Reserve's December meeting after the European close.

The rest of the week also brings a European Central Bank meeting on Thursday and U.S. non-farm payrolls on Friday.

“Both events should be market supportive in that we will get a dovish press conference and we should get a solid non-farm payrolls number,” said McCormack at Macquarie.

“(But) it's a big week for data and that is going to create some nervousness in the market ahead of that.”

Corporate newsflow offered a mixed picture for investors waiting to decide whether European equities are a good bet for 2014 and - if so - which bits of the market to focus on.

Air France-KLM rose 5.5 percent after posting a rise in passenger traffic in December.

Dutch paints and chemicals firm AkzoNobel fell 1.8 percent after reiterating its 2013 operating income outlook but raising guidance for 2014 restructuring charges.

“Things could get worse before they get better,” Filip De Pauw, analyst at ING, said in a note, reiterating a 'hold'.

“We believe investors could be slightly disappointed with the cautious tone of the press release on current trading conditions and the upward revision of restructuring charges.” -Reuters