Top European index closes at highest level since 2001


European stock markets returned from Christmas holidays in buoyant mood, posting their highest close in almost four-and- a-half years as oil prices fell.

But trading volumes were less than a fifth of the usual daily flow and corporate news was thin on the ground.

However, brewing giant InBev rose 2.2 per cent as the company named Brazilian Carlos Brito as chief executive, as part of a management shake-up to emphasise direct selling of beer and boost sales volume.

Gains were seen in almost all sectors but oil and gas stocks underperformed as crude prices fell more than 1.5 per cent due to warmer-than-average US temperatures and a recovery of production from Opec member Nigeria.

The pan-European FTSEurofirst index of 300 leading shares ended 0.3 per cent firmer at 1,279.6 points, its highest close since late August 2001. Turnover was extremely light at less than 500 million shares, compared with more usual daily turnover of around 2.5 billion shares.

The index has soared 23 per cent this year and is on track for its best annual performance since 1999, but many analysts and strategists expect a more subdued performance next year.

"With the European Central Bank joining the global trend for tighter monetary policy, the backdrop for equity markets is becoming more challenging," said Clive McDonnell, European strategist at S&P Equity Research.

Most European markets resumed trading after the Christmas break except for Europe's biggest market, London, while the Irish Stock Exchange also remained closed. Both will re-open today.

"The absence of bad news is one trigger for the rather good performance at the moment, but there is virtually no liquidity," said Juergen Lukasser, a global fund manager at Constantia Privatbank in Vienna.

Around Europe, Paris's CAC- 40 rallied 0.2 per cent and Frankfurt's DAX rose 0.5 per cent.

In the US the Dow Jones industrial average closed 105.50 points down at 10,777.77, while the Nasdaq shed 22.53 to end at 2,226.89.

Energy stocks bore the brunt of the fall as crude oil prices slid below $58 a barrel. A fall in the share prices of online retailers helped push the Nasdaq into negative territory, while stocks were also affected by the rise in short-term treasury note yields above long-term yields for the first time in five years, an event that may signal a slowdown in economic expansion - (Reuters).