* FTSEurofirst 300 up 0.5 pct, Euro STOXX 50 up 0.5 pct
* Telecom Italia surges on speculation of Brazil unit sale
* Europe stocks drew record inflows from US in 2013 -Lipper
By Blaise Robinson
PARIS, Jan 3 (Reuters) - European stocks rose on Friday,
recouping some steep losses suffered in the first session of the
year, with Telecom Italia surging on speculation of a
sale of its Brazilian wireless unit.
Retailers also gained ground, led by Britain's Next
which soared 10 percent after reporting strong Christmas sales,
raising its profit forecast and unveiling a special dividend.
Overall, trading volumes were very light however - about 75
percent of the daily average for blue-chips - as many market
players were still away following the New Year break.
The FTSEurofirst 300 index of top European shares
ended 0.5 percent higher at 1,312.15 points, recovering some
poise after a 0.8 percent drop on Thursday.
"We're in a tight range today, with very low volatility. The
market is moving sideways which makes trading quite difficult.
We'll have to wait for next week to really see a trend
emerging," said Margarita Rivas, sales trader at GVC Gaesco
Valores, in Madrid.
Shares in Telecom Italia surged 6.9 percent on a
report that Spain's Telefonica was readying a joint
offer for the Italian company's Brazilian wireless unit TIM
Shares in Portugal's Banco Espirito Santo also
featured among the top gainers, surging 8.2 percent, benefiting
from a fall in the country's sovereign bond yields and catching
up with recent gains in its banking sector.
Portugal's benchmark 10-year bond yields were
at their lowest since May, tracking other euro zone peripheral
issuers and reflecting confidence that the economic outlook in
the euro zone, including bailed-out Portugal, is improving.
Around Europe, the UK's FTSE 100 index gained 0.2
percent, Germany's DAX index rose 0.4 percent, France's
CAC 40 added 0.5 percent, and the euro zone's blue-chip
Euro STOXX 50 index gained 0.5 percent, to 3,074.43.
The start of the year tends to bring fresh money into
equities, but there has been some caution after a stellar 2013,
when the FTSEurofirst 300 gained 16 percent and the euro zone
blue-chip Euro STOXX 50 index rose 18 percent.
"What we have seen from slightly more longer-term accounts
is that they have had a cracking return from 2013 and they have
taken some risk off the books," said Jordan Hiscott, a senior
trader at Gekko Global Markets, in London.
"They are looking to see which way the market moves in the
first few weeks of January before taking new long positions."
European equities enjoyed record net inflows of $16.3
billion from U.S. investors in 2013 - nearly three times the
previous record of $5.8 billion seen in 2006, according to
Thomson Reuters' Lipper service.
The inflows strongly accelerated in the last quarter of the
year. Investors poured in $7.6 billion in October-December as
improving economic data and a more dovish European Central Bank
helped European benchmark indexes wrap up their best annual
performance in four years.
Asset returns in 2013: