European shares drift near highs; Swiss Re bounces

European shares clung to two-and-a-half-year highs in lacklustre trading yesterday, while Swiss Re rallied on news its likely pay-out in the wake of Asia's tsunami tragedy will be less than 100 million Swiss francs ($88.3 million).

Swiss Re shares have been under pressure as investors fretted about the company's exposure to the region, where the death toll from Sunday's tsunami waves is expected to top 100,000.

The stock rose 1.4 per cent to 81.5 Swiss francs, nearly back where it was prior to the weekend's events.

Insurance analysts also reassured investors in other stocks in the sector that the fall-out from the disaster is likely to be limited.

"While this is a horrendous tragedy by any measure, we do not expect it will have major consequences for the insurance industry," said Paul Goohind, an analyst at broker Bear Stearns.

Talk of mergers and acquisitions gave some impetus to a quiet market.