Reuters logo
Strong miners push European shares to set 2-month high
August 5, 2013 / 11:40 AM / 4 years ago

Strong miners push European shares to set 2-month high

* FTSEurofirst 300 index rises 0.2 percent

* Basic resources stocks gain ground on China data

* HSBC takes most points off FTSEurofirst after results

By Atul Prakash

LONDON, Aug 5 (Reuters) - European shares climbed to a new two-month high on Monday, led by basic resources stocks after positive analyst comments and data showing China’s services sector steadied last month.

The STOXX Europe 600 basic resources index rose 1 percent, helped by a 1.6 percent rise in Anglo American when Citigroup raised its target price for the stock after the company’s results.

According to Thomson Reuters StarMine data, all miners among the 29 percent that have announced their results so far have met or beaten expectations. In contrast, only 56 percent of firms on the overall STOXX Europe 600 have met or beaten second quarter forecasts, with 61 percent of results in.

Sentiment also improved after a survey showed new business in China’s services sector recovered in July from a multi-year low.

European basic resources stocks have gained more than 10 percent since early July after falling sharply this year on concerns about the demand for metals in top consumer China. The sector index is still down about 19 percent in 2013.

“We like the materials sector, which has been unloved for a long time. The sector faces some structural issues, but we have seen more disciplined capital expenditure and that’s positive,” James Butterfill, global equity strategist at Coutts, said.

“We have a positive bias towards the broader stock market as we think that valuations are still not challenging and the earnings season has been positive,” Butterfill said.

At 1101 GMT, the FTSEurofirst 300 index was up 0.2 percent at 1,226.72 points after hitting an intra-day high of 1,231.31, the highest since late May.

However, gains were capped by a 4.2 percent fall in HSBC , Europe’s biggest bank, after it posted slower than expected earnings growth.

HSBC took the most points off the FTSEurofirst 300 index, with volumes rising to 87 percent of its 90-day daily average, against 28 percent for the blue-chip index.

Among other major decliners, Danone fell 1.1 percent after New Zealand’s Fonterra, the world’s biggest dairy exporter, said it had found bacteria in some products that could cause botulism.

In response, China has halted the import of some dairy products, while Danone said it has recalled products that may have contained the contaminated whey.

But sentiment towards the broader stock market remained positive, helped by euro zone PMI data and Friday’s U.S. jobs data that pushed back expectations for any trimming of U.S. monetary stimulus.

“The market is getting some support as the (U.S. stimulus) tapering timetable is likely to be changed,” Mike van Dulken, head of research at Accendo Markets, said. “The market still has a bullish bias and we could revisit the May highs.”

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below