|Chennai||Rs. 27770.00 (0.07%)|
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* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.5 pct
* Miners perform well after data shows Chinese growth
* Worries remain over U.S. "fiscal cliff" talks
* Spanish bank Bankia plunges on negative valuation report
By Sudip Kar-Gupta
LONDON, Dec 27 (Reuters) - European shares edged higher on Thursday, with mining stocks among the best performers, although concerns over the outcome of U.S. budget talks prevented many investors from taking on big, new equity positions.
The pan-European FTSEurofirst 300 index rose by 0.2 percent to 1,139.71 points by around midday, close to a 19-month high of 1,144.15 points reached last week.
The euro zone's blue-chip Euro STOXX 50 index also gained 0.4 percent to 2,659.09 points, although volumes remained relatively thin due to the Christmas holiday season.
Investors stayed focused on plans by U.S. politicians to avoid a "fiscal cliff" - a combination of government spending cuts and tax rises due to take effect early next year which could hit the U.S. economy.
Most investors expect a deal on the U.S. budget to be struck eventually, although uncertainty over the situation has trapped the FTSEurofirst 300 index in a relatively tight 25 point trading range since the start of December.
"The majority view is that a solution will be reached on the 'fiscal cliff' in a timely fashion," said XBZ European equity options broker Mike Turner.
Turner added that investors were positioning themselves in a "neutral" manner going into the end of the year, being neither too 'long' by betting on further gains or 'short' by betting on a market fall, while the U.S. situation remained unresolved.
"Most people are taking a neutral stance, as opposed to trying to second-guess the outcome of the U.S. talks," he said.
CHINESE DATA BUOYS MINERS
The STOXX 600 European basic resources index, which includes major mining stocks, was the best-performing sector. The index rose 1.4 percent after fresh signs of economic growth in China, the world's top metals consumer.
Annual growth of China's industrial profits quickened to 22.8 percent in November from October's 20.5 percent, official data showed on Thursday, reinforcing signs of a steady economic recovery thanks to pro-growth policies.
Angelos Damaskos, who heads British fund management firm Sector Investment Managers Ltd, said gold mining stocks could be a good place for investors to put their money since gold would remain in favour due to the uncertain global economic backdrop.
"There is no question that the global debt problems are so large that they are unlikely to be resolved in the short-term, therefore investor demand for bullion will keep growing, pushing its price higher," he said.
Concerns remain over the euro zone's sovereign debt crisis as well as the the U.S. fiscal cliff, highlighted on Thursday by a 13 percent fall in nationalised Spanish bank Bankia after the bank's rescue fund gave a negative valuation on the lender.
However, most major European equity markets are set to finish 2012 with solid gains, helped in part by a pledge in July from the European Central Bank (ECB) to take new measures to protect the euro currency and tackle the region's economic problems.
The FTSEurofirst 300 and Euro STOXX 50 indexes are up by around 14 and 15 percent respectively since the start of 2012, while Germany's DAX has risen nearly 30 percent.