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Euro Stocks Gain as Dollar Rises, Oil Falls

Reuters
Friday, 8 Aug 2008 | 12:23 PM ET

European shares ended a volatile session with gains on Friday as a sharp drop in crude oil more than offset initial disappointment over earnings from U.S. home lender Fannie Mae .

The FTSEurofirst 300 index of top European shares provisionally closed 0.7 percent higher at 1,197.85 points, having swung between 1,179.92 and 1,200.56 points during the session.

The index gained 2.9 percent on the week but is still down more than 20 percent this year.

The euro's fall to five-month lows against the dollar after the European Central Bank's indication on Thursday it was in no hurry to raise euro zone rates helped a number of sectors including autos, luxury goods and defensive stocks.

"The economic data for the euro zone is in free fall. We have looked at it historically and it usually indicated that earnings expectations are between 40 and 60 percent too high for the coming year," says strategist Andreas Huerkamp at Commerzbank in Frankfurt, who estimates that expectations need to come down by around 20 percent.

Among car makers, Daimler added 3.9 percent, BMW was up 6.5 percent and Peugeot and Renault added 4.3 and 4.6 percent respectively.

The DJ Stoxx European car sector index jumped 3.4 percent.

Crude oil hit a low of $115.61 a barrel.

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