European shares score best year since 2013 on tech and mining surge


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LONDON/MILAN (Reuters) - European stocks inched lower on Friday, the final trading day of 2017, scoring their strongest year of gains since 2013 thanks to a surge among tech stocks and a robust resources sector.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, November 20, 2017. Picture taken with a fish-eye lens. REUTERS/Kai Pfaffenbach

The pan-European STOXX 600 index fell 0.1 percent in thin volumes on the day, while euro zone blue chips .STOXX50E dipped 0.5 percent.

Britain's FTSE 100 .FTSE ended at a new record high, up 0.9 percent in a half-day of trading for the index, while Italian equities .FTMIB declined 1.2 percent at a 16-week low after the president dissolved parliament on Thursday and an election day was scheduled for March 4.

“Recent developments in Italian politics have further increased the probability that the election outcome will be a very fragmented parliament and made the formation of a governing coalition after the election more difficult,” said UniCredit economist Loredana Federico.

Overall 2017 has been a positive year for European stocks, fuelled by strong company earnings, a supportive economic backdrop and an absence of major political upsets.

The STOXX ended 2017 with a gain of 7.7 percent, its strongest year since 2013. Germany .GDAXI and Italy's .FTMIB benchmarks were the standout performers, rising 12.5 percent and 13.6 percent respectively this year.

Periphery markets have also had a strong year, with Greece's benchmark .ATG up 24.7 percent and Portugal's PSI .PSI20 up 15.2 percent.

Britain's FTSE 100 .FTSE has lagged slightly, rising 7.6 percent in 2017, as has Spain's IBEX .IBEX, which is up 7.4 percent as the crisis in Catalonia curbed enthusiasm for Spanish equities in the latter part of the year.

Brexit uncertainty has dented sentiment towards UK equities, while a recovering pound has also put pressure on the blue chips’ large proportion of overseas earners.

“Brexit is going to be very much the same story as last year ... that’s just going to weigh constantly on the markets,” Jasper Reimers, senior analyst at Vertex Capital, said.

Looking ahead to 2018, investors remain upbeat about the region’s stock market although there are concerns that a further rise in the euro could erode earnings and political risks could slow the economy.

Among sectors, this year has been dominated by a near-20 percent rise among Europe’s tech stocks .SX8P, closely followed by basic resources .SXPP. Chipmaker AMS (AMS.S) has been the top-gaining firm on the STOXX, surging 208 percent in 2017.

Telecoms .SXKP, retail .SXRP and media .SXMP have brought up the rear, with year-to-date losses ranging between 2.4 to 3.7 percent.

Furniture retailer Steinhoff (SNHG.DE) is the worst-performing individual stock this year, down 93.5 percent in 2017 after its CEO resigned amid an accounting probe.