* FTSEurofirst 300 index rises 0.3 percent
* Index heads for biggest weekly gain in 1 month
* Basic resources stocks extend Thursday’s gains
By Atul Prakash
LONDON, March 21 (Reuters) - European shares headed for their biggest weekly gain in a month on Friday, supported by a rally in basic resources stocks and some positive technical buying signals.
The European basic resources index rose 1.3 percent, extending gains on expectations China would support its economy after Premier Li Keqiang said on Thursday the world’s top metals consumer will speed up investment and construction plans to ensure domestic demand expands at a stable rate.
Stronger miners, the biggest sectoral gainers, helped the FTSEurofirst 300 to gain 0.3 percent to 1,309.39 points by 1523 GMT after moving in and out of negative territory. The index, which is about 3 percent below its 5-1/2-year high set in January, has gained almost 2 percent this week.
“The market is consolidating at a very high level before we push sharply higher. We need a catalyst and that might come from the European Central Bank in the form of fresh policy initiatives,” Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.
“The elements for the continuation of the current rally are on the table. The market is not cheap but not extremely expensive either and economic growth is going to be decent. If you believe in the scenario of a gradual economic upturn, you should play the sectors that benefit from that and invest in stocks such as basic resources and banks.”
The FTSEurofirst 300 gained nearly 20 percent since the start of 2013 to a February peak and the medium term prospects for European equity remained healthy, analysts said.
A Reuters poll on Thursday predicted European stocks will extend their rally in 2014, fuelled by a long-awaited rebound in corporate profits as the region’s economy picks up and global investors shift from emerging markets to Europe.
Stock markets across Europe were broadly positive, with Britain’s FTSE 100 index rising 0.4 percent, Germany’s DAX advancing 0.7 percent and the euro zone’s blue chip Euro STOXX 50 index gaining 0.6 percent.
Charts suggested the market’s bias was on the upside in the near term, but some strong resistance levels could limit gains.
“Stock prices are consolidating within a slowly rising trend channel. The Euro STOXX 50 has broken the 50-day moving average line today, suggesting some upside potential in the next few days,” Roelof-Jan van den Akker, senior technical analyst at ING Commercial Banking, said.
“The first resistance is coming in at the falling trend channel at around 3,154 and the upper end of this consolidation pattern could be found at around 3,195, in line with a strong horizontal resistance level on the weekly chart at 3,200.”
Friday’s gains come despite tensions over Crimea, with European shares proving more resilient to anxieties over the region than in the previous weeks.
Russia has annexed Crimea from Ukraine, a move condemned by the West, but Moscow’s assertion that no other Ukrainian region would be subject to intervention helped stocks to move higher this week.
Among individual sharp movers, Irish airline Ryanair rose 2.7 percent after a spate of upbeat broker comment after an update on its marketing overhaul and financing plans.
Europe bourses in 2014: link.reuters.com/pad95v
Asset performance in 2014: link.reuters.com/rav46v
Today’s European research round-up
Additional reporting by Alistair Smout; Editing by Ruth Pitchford