European shares hit high

LONDON: European shares inched higher in thin volume on Tuesday, rising for the seventh straight session, with French retailer Carrefour leading the gainers after listing its Spanish discount chain.

The pan-European FTS Euro-first 300 indexes of top shares closed 0.1 percent higher at 1,122.23 points, hitting a one-month closing high, though moves were exaggerated by thin volumes of around 70 percent of its 90-day average.

Carrefour, the world's second-biggest retailer, rose 4.5 percent after listing the Dia chain in Spain, in which each shareholder will get a stake.

Banks were lower, with the STOXX Europe 600 banking index down 0.8 percent. French lenders including Societe Generale and BNP Paribas fell further, down 1.7 and 1.3 percent, weighed by bearish comments from Standard & Poor's on Monday about a Greek debt rollover plan.

The FTS Euro-first 300 index held above its 50-day moving average in a technical indicator seen as bullish for equities. The closely-watched Euro STOXX 50 index the euro zone's blue chip index, also held above its 50-day moving average, closing at 2,850.51 points.

"For now, prices are consolidating above the next strong horizontal resistance area around 2,890 (for the Euro STOXX 50 index). This should likely be followed by a pull-back to around 2,800 before the uptrend continues," said Roelof-Jan van den Akker, senior technical analyst at ING.

Optimism was tempered by data showing that growth in the euro zone's services sectors slowed for a third straight month in June, and by more than an initial estimate, with sluggish new orders dimming the outlook.

"The big question is whether it will go down in the second half of the year, and also whether the US ISM (non-manufacturing data) will show whether the weakness was temporary due to the Japan earthquake," said Koen de Leus, economist at KBC Securities.

Highlighting underlying caution in the market, the Euro STOXX 50 volatility index, one of Europe's main gauges of investor discomfort, rose 2.7 percent.

The higher the volatility index, based on sell and buy options on the Euro STOXX 50 index, the lower the market's risk appetite.

Data due later this week is likely to provide fresh direction for equities, with the US ISM non-manufacturing numbers on Wednesday, the European Central Bank interest rate decision on Thursday and US non-farm payrolls on Friday.

Copyright Reuters, 2011