* European benchmark set for 26 pct gain for the year
* Banks, commodity stocks strong
* Many markets closed, incl. Germany, others finish early
By Simon Falush
LONDON, Dec 31 (Reuters) - European shares advanced in
morning trade on Thursday on the final day of the year,
supported by banks and commodity stocks which gained ground on
firming risk appetite.
At 0903 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.2 percent at 1,044.93 points.
After a dismal 2008, the Europe's benchmark index is on
track to record a gain of 26 percent this year, its best annual
performance since 1999.
Banks were a major support to the index on Thursday with
Barclays <BARC.L>, HSBC <HSBA.L>, Societe Generale <SOGN.PA> and
BNP Paribas <BNPP.PA> up between 0.4 percent and 0.8 percent.
Energy stocks and miners were higher as crude rose towards
$80 per barrel <CLc1> and metal prices firmed.
BG Group <BG.L>, BP <BP.L>, Royal Dutch Shell <RDSa.L> and
Total <TOTF.PA> added 0.3-0.7 percent, while Rio Tinto <RIO.L>,
Xstrata <XTA.L>, Lonmin <LMI.L>, Kazakhmys <KAZ.L> and BHP
Billiton <BLT.L> added 0.3-1.1 percent.
"Economic figures from the U.S. and China were telling us
that things were getting better, and that has led to a positive
wind (in December) so we can't say the upwards trend has
stopped," said Geert Ruysschaert, analyst at Fortis Bank, in
Brussels.
Volumes were very thin and markets stayed closed on Thursday
in a number of European countries, including Germany, Italy,
Austria, Denmark, Finland, Norway, Spain, Sweden and
Switzerland.
Euronext markets will close at 1300 GMT, while London
markets will close at 1230 GMT.
European stocks have surged 62 percent since plummeting to a
record low in early March, propelled by a sharp rebound in
cyclical stocks such as the basic resources sector <.SXPP>,
which has jumped 102 percent this year.
The FTSEurofirst 300, however, is still down 36 percent from
a multi-year peak reached in mid-2007, before fears over toxic
assets in banks' balance sheets dampened investor appetite for
risky assets and sparked a financial crisis.
And analysts are not convinced that the recent rally is set
to last for much longer.
"We could go back to a situation like we had in the second
half of the 1970s when the market rose in 1974 and then traded
sideways for the rest of the decade due to weakness in the
economy," Ruysschaert at Fortis said.
He said that measures like quantitative easing in the UK,
cuts in consumption taxes and subsidies for the auto industry
had been supportive of the economy, but that these would not
last.
"With all the government measures to support the economy,
it's hard to see what is going on in the real economy."
(Additional reporting by Blaise Robinson in Paris; editing by
Simon Jessop)
