Food stocks help lift European shares

European shares rose slightly this morning, helped by gains in major oil and food stocks.

Traders said recent central bank stimulus measures gave equity markets upward potential despite unresolved fears over the euro zone debt crisis.

The pan-European FTSEurofirst 300 index rose 0.2 per cent to 1,117.99 points, recovering from a 0.3 per cent dip yesterday. The euro zone Euro STOXX 50 index was broadly flat at 2,557.52 points.

European equity markets have rallied since July 26 when European Central Bank head Mario Draghi said he would do "whatever it takes" to protect the euro from the region's debt crisis.

He followed that up on September 6 with a plan to buy government bonds.

Stock markets received a further boost this month when the US Federal Reserve said it would pump $40 billion into the economy each month until it saw a sustained upturn in the jobs market.

Although markets have dipped on persistent signs that the euro zone debt crisis is far from over, with Spain under pressure for a further bailout package, the Euro STOXX 50 index remains up by around 20 per cent since late July.

"We're in for another sideways week, but with the potential to go higher. Overall, the underlying bias is still one of a positive note," said Mike Turner, European equity options broker at XBZ.

Several traders added that the moves by the ECB and the Fed should suffice to ensure that any equity market pull-back would be relatively limited, and that investors could use market declines to buy up stocks on the cheap.

"There's good underlying support for these markets, and any dips should be bought," said Berkeley Futures associate director Richard Griffiths.

Reuters