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`Potter' affects Europeans

European shares closed higher Friday, tracking a firmer start on US markets, which staged a healthy recovery from the previous session's steep falls, dealers said.

The British FTSE 100 index of leading shares closed 0.69 percent higher at 4,160.1 points, the German DAX 30 index edged down 0.25 percent to 3,238.98 points and the French CAC 40 index ended with a gain of 0.80 percent at 3,190.11 points.

The DJ Euro Stoxx 50 index of top euro-zone shares ended 0.94 percent higher at 2,515.33 points.

The euro stood at US$1.1615.

Volumes in London were heavy due to the end-of-quarter derivatives expiration, even though the morning's "double witching" period went smoothly. Some 2.89 billion shares were exchanged in 173,906 deals.

On Wall Street, the Dow Jones Industrial Average was up 74.79 points at 9,254.32 -- although conditions were volatile due to "quadruple witching," the expiration of contracts for stock index futures, stock index options, individual stock futures and stock options.

The NASDAQ composite was up 1.10 points at 1,649.74.

Trade was more mixed earlier Friday in Asia, where Japanese shares closed up 0.1 percent at 9,120.39 points and Hong Kong's index finished 0.5 percent lower at 9,930.31 points.

Despite the gains in Europe, analysts said that the foundations of any recovery were by no means solid.

"The rally has continued without really an awful lot of support from economic data, or really from what is happening in the corporate sector," said Alex Scott of Seven Investment management

"We have seen US corporates delivering reasonable performance against earnings expectations from the last quarter, but it was against a backdrop of expectations that had been downgraded quiet heavily in the weeks before," Scott said.

There were clear signs that markets were "getting quite stretched on current valuations," Scott said.

"This is about sentiment more than fundamentals," he said.

Thus much attention would be focused on next Wednesday's meeting of the Federal Reserve Open Market Committee, which is expected to usher in a growth-stimulating interest rate cut of either 25 or 50 basis points.

"In the short term, the Fed is going be the prime focus next week," Scott said.

"A lot of people are expecting a 50 basis point cut and there might be disappointment if we don't see that.

In London, investors eagerly awaited the midnight "witching hour" launch of the latest Harry Potter book. Bloomsbury Publishing saw its shares gain £0.05 to £8.80 after it reported that bumper sales of the latest book -- "Harry Potter and the Order of the Phoenix" -- were set to deliver a 33-percent profit boost this year.

In Paris, shares in the European Aeronautic Defence and Space Company (EADS) rose 3.5 percent to 10.92 euros, extending the sharp gains seen since the beginning of the Paris Air Show, where the group's Airbus unit has announced a series of major new plane orders.

Elsewhere in Europe, the Swiss SMI index edged up 0.37 percent to 4,936.8 points.

Amsterdam's AEX index rose 1.18 percent to 303.4 points, Brussels' Bel-20 gained 1.17 percent at 1,971.78, the Madrid Ibex-35 jumped 2.50 percent to 7,081.6 and the Milan Mib 30 rose 0.68 percent to 26,224.0.
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