By Sudip Kar-Gupta
LONDON (Reuters) - Expectations of monetary stimulus from the European Central Bank (ECB), coupled with a rise in HSBC
The pan-European FTSEurofirst 300 index closed up by 0.3 percent at 1,293.63 points, its highest closing level since mid-2008. The index had also earlier hit a 5-year intraday high of 1,297.01 points.
The euro zone's blue-chip Euro STOXX 50 index also advanced 0.3 percent, to 3,061.18 points, while Germany's DAX - which hit a record high of 9,070.17 points last week - also rose 0.3 percent to 9,037.23 points.
UK bank HSBC rose 2.3 percent to add the most points to the FTSEurofirst 300 after posting a 10-percent rise in third quarter profits and issuing a positive outlook.
European equities were also supported by expectations that the ECB will take on an accommodative tone towards helping the region's economy at its policy meeting on Thursday, after a drop in euro zone inflation in October.
UBS and Royal Bank of Scotland are anticipating an interest rate cut although many others expect the ECB to hold fire on concrete action until at least December.
"An accommodative stance by the ECB is by now not only expected by investors but also demanded politically. So, for a while, the risk is for a break to the upside on equities," said SteppenWolf Capital chief investment officer Phoebus Theologites.
RYANAIR SLUMPS
Moves by major central banks to lift the global economy after the 2008 financial crisis have enabled stock markets to keep rising, even in the face of weak corporate earnings.
Shares in Irish airline Ryanair
According to Thomson Reuters StarMine data, 53 percent of companies on the pan-European STOXX 600 index have missed market expectations with their third quarter results.
Nevertheless, the FTSEurofirst 300 remains up by 14 percent since the start of 2013 and SVM Asset Management fund manager Margaret Lawson felt signs that the European economy was slowly recovering would lift equities further.
On Monday, data from Markit showed that euro zone manufacturing activity accelerated in October as new orders increased for the fourth month in a row.
"The Continent has had its economic difficulties but with ongoing austerity curbing wage inflation and major cost cutting programs, many European companies are looking very competitive. If we start to see any pick-up in economic activity, these businesses are sitting on substantial operational leverage and could see earnings rise very quickly," said Lawson.
(Additional reporting by David Brett; Editing by Louise Ireland)
