In Europe on Wednesday, stocks scored consecutive daily gains for the first time in three weeks, drawing support from a weak euro. The FTSEuroFirst index of the leading 300 European shares <.FTEU3> closed up 0.3 percent, having earlier fallen as much as 0.4 percent, and Germany's DAX <.GDAXI> staged a similar rebound to trade up 0.5 percent before paring some gains. (Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, August 23, 2016. REUTERS)
MILAN: European shares steadied on Friday amid fresh tensions over North Korea but remained near recent highs ahead of this weekend's general election in Germany, where conservative Chancellor Angela Merkel is expected to win a fourth term.
L'Oreal was one of the few bright spots on market talk about possible ownership changes at the cosmetics giant.
L'Oreal rose as much as 6.7% after billionaire Liliane Bettencourt, whose family founded the firm and still owns the largest stake in it, died.
Traders said her death could fuel talk that Nestle could consider selling its stake in L'Oreal, which in turn may look at selling its holding in Sanofi. Both Sanofi and Nestle rose around 1%.
The pan-European STOXX 600 index fell 0.1% by 0805 GMT. Miners were the biggest sectoral faller, down 1.4%, as escalating tensions on the Korean peninsula and China's rating downgrade hit metal prices.
North Korea said on Friday it might test a hydrogen bomb over the Pacific Ocean after U.S. President Donald Trump vowed to destroy the reclusive country.
Among top fallers on the STOXX were London-listed miners BHP Billiton, Anglo American and Glencore, which dragged UK's FTSE down 0.2%.
Germany's blue chip DAX index was little changed, close to a two-month high on the last trading day before the general election in Europe's biggest economy.
The DAX has outperformed euro zone peers over the past four years to hit a record high in June and there are expectations that a victory of Merkel could further support the country's equities, regardless of the makeup of her coalition.
Yet some investors believe that German stocks, especially industrials like carmakers, are too highly priced and could be severely hit by a possible correction in key export market China on the back of a growing pile of debt.
"The risks in a lot of the German companies are being under appreciated," Luiz Sauerbronn, who helps manage US$30bil at global investment advisory firm Brandes Investment Partners.
Sauerbronn however said he was more optimistic about prospects for European equities as a whole given their attractive relative valuations versus the U.S. and sees opportunities in British grocers or European oil companies.
Among German blue chips, utilities RWE and E.ON , which are seen sensitive to possible policy changes in their country following the vote, rose 0.7 and 0.6%.
Among other top movers on Friday was British engineer Smiths Group Plc. Its shares fell 3.9% after full-year revenue growth fell short of analyst expectations even though its pretax profit rose 17% helped by growth in its security scanners business.
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