Sinking euro keeps Europe stock rally alive
* FTSEurofirst 300 ends up 0.3 pct, posts 6th weekly gain in row
* Strong negative correlation between euro, European stocks
* Shares in Eni drop 5.6 pct after dividend cut, capex slashed
By Blaise Robinson
PARIS, March 13 (Reuters) - European stocks pared losses in late trade on Friday and ended higher, keeping their strong rally alive as investors bet that a renewed drop in the euro would boost the region's economy and lift exporter earnings.
The euro has tumbled 3 percent this week against the dollar, hitting 12-year lows below $1.05 on Friday, as the European Central Bank began asset purchases that will eventually help pump a trillion euros into the economy.
The relentless slide in the euro over the past year has given a significant lift to European corporate results after years of stagnating profits. The drop in the single currency is seen translating into a 10 to 13 percent lift in earnings in 2015.
"European stocks are driven by the forex market, big time," said Nicolas Cheron, market analyst at FXCM in Paris.
"The drop in the euro has played a major role in the stock rally in Europe in the past few months even before quantitative easing was launched, and now, with short positions on the euro reaching extreme levels in the short term, European stocks look vulnerable to a pull-back if the currency bounces." Continuación...