European shares turned in their best weekly performance since early December on Friday on optimism about a global recovery after some positive data from the United States during the week provided evidence the economy was growing. But volume was only a third of its 90-day daily average and traders expected the "Santa Claus" rally to lose steam in the New Year, with the eurozone debt crisis far from over and the threat of fresh corporate or sovereign credit rating downgrades looming.
Oil stocks, which are heavily geared towards global growth, were the best performers, with the STOXX Europe 600 Oil & Gas index up 1.3 percent and finishing the week 3.9 percent higher. In the United States, new single-family home sales for November rose to a seven-month high, showing signs the economy is recovering.
European stocks had begun rallying early in the week following strong US housing starts on Tuesday and gathered pace on Thursday after US jobless benefits hit a 3-1/2 year low suggesting the recovery was gaining speed. Stocks with high exposure to the United States were movers on the FTSE 100, with CRH, which has nearly half of its sales in the country, up 2.2 percent to feature in the top performers list. "We have been buying building materials group CRH as US construction has been strong and it is very exposed to the country," said McLean, who expects it will perform well on the back of this growth.
The pan-European FTSEurofirst 300 index of top shares closed up 0.8 percent at 990.0 points - its highest close since December 5. The index ended the week 3.4 percent higher, however, it is down 11.7 percent for the year on concerns that the region's debt crisis could trigger a recession. Policymakers have yet to come up with a solution to the eurozone crisis and threats of sovereign credit rating downgrades still hang over the bulk of the eurozone. Standard & Poor's is expected to release its verdict on debt ratings for 15 eurozone countries in January, two independent European government sources told Reuters.
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