Eurostocks hold near 8-month peak

European blue-chips were treading water yesterday following six straight higher closes, as investors betting on a second-half economic recovery pushed up shares in cyclicals like French building firm Lafarge.

Consumer products companies, chemicals and auto makers also gained, but heavyweight German financial Allianz fell as brokers downgraded the stock after its result on Thursday.

Key indices hit eight-month highs earlier in the session, breaking out of the range they had been trapped in for two months following a spectacular surge between March and June.

"Cyclical sectors and dollar-focused industries were the best performers today. That is telling you that investors believe the economic recovery is here, and they want to buy growth stocks," said Deutsche Bank's David Sheridan.

Defensive sectors such as oils and utilities weakened as portfolios were re-weighted, though trade was thin due to Assumption Day public holidays in many Continental European countries.

At 1540 GMT, with most markets in Europe closed, the FTSE Eurotop 300 index of pan-European blue chips was up 0.1 per cent at 893 points, while the narrower DJ Euro Stoxx 50 index was up 0.2 per cent at 2,548.

The Eurotop 300 earlier hit 897, its highest point since December 9 last year and taking its rally since the six-year low in mid-March to 32 per cent.

The DJ Stoxx 50 topped out at a high of 2,566, up 39 per cent over the same period, buoyed by a generally strong performance during the mid-year reporting season, which is now starting to wind down.

"The reporting season has been somewhat more benign than was anticipated," said JP Morgan Fleming Asset Management strategist Bill O'Neill, adding that positive surprises had outnumbered negative surprises by about three-and-a-half to one.

"European companies are now very well placed to see quite a marked acceleration in earnings growth in the second half."

In New York, the Dow Jones industrial average was up 0.1 per cent, as was the Nasdaq Composite Index after data lent further weight to arguments that things were improving in the world's largest economy.

July consumer prices rose 0.2 per cent, as expected, while industrial production jumped a higher-than-expected 0.5 per cent in the same month.

In London, the FTSE-100 ended flat, while the Swiss market closed up 1.3 per cent and France's CAC-40 was up 0.5 per cent.

Germany's DAX, the only market still officially trading, was down 0.4 per cent.

Construction stocks were the top performers across Europe, with Lafarge powering up five per cent and the UK's Balfour Beatty up 5.4 per cent.

Swiss asset manager Julius Baer shares jumped 8.4 per cent on its upbeat second-half forecast, although first-half earnings fell by 86 per cent from a year earlier.

Danish luxury audio and television maker Bang & Olufsen posted higher profit, said earnings would rise further and doubled its dividend, sending its shares rocketing 18 per cent higher.