European shares held steady on Friday while a closely watched measure of stock market volatility sank to a near seven-year low in a further sign of mounting investor confidence about the state of the global economy.
The Euro STOXX 50 Volatility Index which reflects options pricing and demand to protect against falls in the underlying cash market index, fell 2.7 percent to 14.68 points, having hit levels not seen since early 2007 earlier in the day.
The VSTOXX has been falling in a fairly steady fashion since hitting 59.8 points in 2011, helped by intervention by the European Central Bank and other central banks across the world to shore up the debt and funding markets.
"It's (the move on the VSTOXX) the effect of both the improved visibility on the macro front and strong liquidity from the central banks. Very few people feel the need to hedge their positions at the moment, very few people are buying volatility," said Vincent Cassot, head of equity derivatives strategy at Societe Generale.
"That's the short-term picture, however. Investors are feeling relaxed for the rest of 2013, but a little less relaxed for the start of 2014. The curve is quite steep between the spot V2X, and the January contract, which currently trades at 18.65."
The FTSEurofirst 300 was down 0.37 of a point at 1,295.24 points by 1134 GMT, within a whisker of a 5-1/2-year closing high of 1,304.25 seen on Monday. Trading volumes were light, at just a quarter of the 90-day daily average.
Dow Jones industrial average futures edged higher.
