* Pan-European STOXX 600 index closes up 0.7 pct
* FTSEurofirst ends up 0.8 pct
* Markets propped up by prospect of more ECB help
By Sudip Kar-Gupta
LONDON, July 1 (Reuters) - European shares rose on Friday, lifted by expectations that the European Central Bank would take action to support markets in order to ease worries about the fallout from Britain’s vote to leave the European Union.
The pan-European STOXX 600 index rose 0.7 percent, while the FTSEurofirst 300 index climbed 0.8 percent.
The STOXX 600 rose around 3 percent over the week, although it remains 4 percent below its closing level on June 23 - the day before the result came through that Britain had voted to leave the European Union.
The STOXX 600 slumped 11 percent in the first two trading sessions following that “Brexit” vote result in the United Kingdom, but has since recovered some ground, helped by signs that the ECB and Bank of England will look to prop up markets.
ECB Executive Council member Benoit Coeure told Le Monde newspaper central banks were ready to act if they felt the Brexit vote threatened financial stability.
Borrowing costs across the euro zone also sank to new lows on Friday on mounting expectations of central bank policy action.
“It seems reasonable to think more policy support is coming. The Bank of England looks ready to act too,” said Gary Paulin, head of global equities at Northern Trust Capital Markets.
Paulin backed French construction stock Vinci in this context, arguing it could do well if governments look for fiscal stimulus measures, such as spending more on construction projects. Vinci shares ended 1 percent higher.
Joe Rundle, head of trading at ETX Capital, said investors would have no choice but to put money into stocks, given the record low bond yields and minimal returns on cash.
“In all this, stocks just keep pumping higher as record low bond yields means investors have to park their cash somewhere else,” said Rundle.
However, strategists at Wall Street bank Citigroup were more cautious, saying lower earnings ensuing from a weaker economic backdrop could limit the extent to which stocks could rise.
“We think global equities are trapped in a trading range, with the downside set by yield attractions and the upside capped by poor EPS (earnings per share) prospects,” they wrote. (Additional reporting by Danilo Masoni in Milan; Editing by Toby Chopra and Janet Lawrence)