* FTSEurofirst 300 up 1.1 pct, at fresh 2-year high
* STOXX Europe 600 at highest level since mid-2008
* Standard Chartered rises after record profits
* Central bank measures seen to continue to support equities
By Sudip Kar-Gupta
LONDON, March 5 (Reuters) - Major European equity indexes
rose to fresh highs on Tuesday, buoyed by financial stocks and
expectations that central banks will sustain stimulus measures
to support the global economy.
The pan-European FTSEurofirst 300 index rose 1.1
percent to 1,181.58 points to mark a fresh two-year high by
The euro zone's blue-chip Euro STOXX 50 index
also advanced 1.4 percent to 2,655.05 points while the broader
STOXX Europe 600 index rose 1.3 percent to 292.55
points, its highest level since mid-2008.
British-listed bank Standard Chartered rose 2.8
percent to add the most points to the FTSEurofirst 300 index
after it reported record profits.
"Standard Chartered and its rival HSBC have extremely strong
franchises," said Cyrille Urfer, who heads up asset allocation
at Swiss bank Gonet.
Urfer said around 20 percent of his European equity
portfolio was invested in northern European financial stocks,
which often outperform when stock markets rise.
Urfer said his firm had "very little" exposure to shares in
Spain and Italy, whose markets have been hit hard by the euro
zone's sovereign debt crisis and Italy's political deadlock.
However, he said plans by the U.S. Federal Reserve and
European Central Bank (ECB) to inject fresh liquidity to lift
the economy would continue to support stock markets.
Equities currently offer better returns than cash or bonds,
whose returns reflect the decision by major world central banks
to hold interest rates near record lows.
"This re-allocation process (from bonds to shares) will
continue to be an extremely strong support for equity markets,"
LIMITED NEAR-TERM GAINS?
Urfer said he would not be significantly adding to his
equity position at present, given the Italian election
Berkeley Futures associate director Richard Griffiths said
equity markets may struggle to rise much higher in the near
He added that clients had been selling "call" options -
which bet on a future market rise - on the German DAX
and Euro STOXX to get some protection in case the equity market
rally petered out in the near term.
Griffiths said clients were selling "call" options due to
mature in 2-3 months on the DAX with a strike price of around
8,000 points, as well as selling "calls" on the Euro STOXX 50
with a strike price of 2,750 points.
This implies that many investors do not expect those two
indexes to rise by more than 3 percent by April or May.
"It's difficult to see the market rallying hugely from here.
Any moves up from here will be sluggish," he said.
MB Capital trading director Marcus Bullus expected equity
markets to hold around these levels, and for bargain-hunters to
use days when the market fell to buy shares on the cheap, which
would prevent any major stock market pull-back.
"Whenever the market falls, the bargain-hunters come
straight back in," he said.