* FTSEurofirst 300 closes 0.4 pct higher, up for 4th session
* Heavyweight financial stocks help lead advance
* Autos down on reports of China ending tax breaks
* Euro zone debt crisis keeps investors cautious
By Brian Gorman
LONDON, Dec 9 (Reuters) - European shares rose for a fourth
straight day to hit a 26-month closing high on Thursday, as a
fall in U.S. jobless claims, as well as extended tax cuts,
sparked optimism on growth in the world's biggest economy.
The FTSEurofirst 300 <> index of top European shares
rose 0.4 percent to 1,123.75 points, the highest close since
late September 2008.
The European benchmark is up more than 74 percent from its
lifetime low of March, 2009, with several major economies having
emerged from recession, helped by stimulus from governments and
central banks worldwide.
"People are focusing on the growth prospects for next year,"
said Richard Jeffrey, chief investment officer at Cazenove
Capital Management, said.
"The levels (of equities) might well prove sustainable, but
what we would expect to see is people focusing more on value and
defensiveness, rather than cyclicality and risk."
Heavyweight financial stocks were among those boosting the
index. Barclays <BARC.L>, UBS <UBSN.VX>, Societe Generale
<SOGN.PA> and AXA <AXAF.PA> rose between 2.5 and 4.6 percent.
Analysts said stocks like AXA, a poor performer this year,
were catching up with the recent rally in the market and were
benefitting from sector rotation.
Standard Chartered <STAN.L> bucked the trend, down 3.6
percent after it said costs were rising quickly as it fights to
hire and retain staff in its hot Asian markets, taking the gloss
off record income and profits. []
Jeffrey said he expected sectors like telecoms and drugs to
be among the better performers going forward.
On the downside, automobile stocks <.SXAP> fell 2.1 percent,
with traders citing a report China may end tax breaks for
passenger cars. Auto-parts maker Continental <CONG.DE> dropped
6.5 percent, while Peugeot <PEUP.PA> and BMW <BMWG.DE> 5.5 and
2.8 percent respectively. []
NEW CLAIMS
The slide hurt Germany's benchmark DAX <>, which
closed 0.2 percent lower, though Britain's FTSE 100 <> and
France's CAC40 <> rose 0.2 and 0.7 percent respectively.
The Thomson Reuters Peripheral Eurozone Countries Index
<.TRXFLDPIPU> rose 0.7 percent.
New U.S. claims for unemployment benefits fell more than
expected last week and the four-week moving average hovered at
two-year lows, according to a government report that revived
hopes a labour market recovery was under way. []
U.S. Treasury prices rose, retracing a dramatic sell-off
earlier this week fueled by inflation and deficit fears.
[]
Other macroeconomic conditions also remained favourable. The
Bank of England's Monetary Policy Committee voted to keep
interest rates unchanged, though it made no new quantitative
easing purchases after its monthly meeting, in line with
expectations.
ASML Holding <ASML.AS> rose 8 percent after the Dutch chip
equipment maker revised its forecast for fourth-quarter bookings
to 2 billion euros, from more than 1.3 billion euros previously.
[]
A solid outlook by microchip maker Texas Instruments <TXN.N>
on Wednesday also helped shares.
But retailer HMV <HMV.L> slumped 16.6 percent after it said
severe weather was hitting Christmas trade, compounding problems
caused by competition from grocers and the Internet.
"From an asset allocation perspective, equities are the most
compelling asset class now compared to most government bonds.
Also, we have another big fiscal impulse in the U.S. which has
brightened the near-term growth prospects for the U.S. economy,"
said Klaus Wiener, head of research at Generali Investments.
But the euro zone debt problem kept a cap on gains. Fitch
Ratings slashed Ireland's credit rating, saying the downgrade
reflected the additional costs of restructuring and supporting
the banking system. []
(Additional reporting by Atul Prakash; Editing by David Holmes)
