European shares end up on U.S. tax cuts

By Joanne Frearson

LONDON (BestGrowthStock) – European shares hit a four-week closing high on Tuesday, boosted by economic recovery hopes after the United States extended Bush-era tax cuts, while miners gained on rising demand expectations.

The pan-European FTSEurofirst 300 index of top shares closed 0.9 percent higher at 1,115.66 points, having earlier hit its highest intraday levels since late September 2008.

“The Obama tax cuts have diminished some of the uncertainty for the markets, as they were more than expected,” Koen De Leus, strategist at KBC Securities said.

Investor sentiment got a lift after President Barack Obama announced late on Monday a compromise deal to renew tax cuts not just for the middle class, but also for wealthier Americans, a move that is expected to increase consumer spending and boost the economy.

However, De Leus said it was a relief rally. Uncertainty about the euro zone debt crisis could “destroy all the profits which have been made in the past week,” he added.

Since the Irish were bailed out last month, investors have grown nervous that the debt problems could spread. So far, Germany and other fellow euro zone states have resisted calls from the International Monetary Fund to do more to address the currency bloc’s debt crisis.

Miners featured among the top performers, extending the previous session gains as copper hit a record high on supply worries and prospects for rising demand.

Antofagasta, ENRC and Xstrata gained 1.6 to 4.9 percent.


Retailers were also high movers. British grocer J Sainsbury

jumped 4.3 percent after traders cited renewed talk of bid interest from top shareholder Qatar Holding.

“Hearing talk of Qataris bidding 450 pence (per share) for Sainsbury,” said one trader.

Construction stocks were in demand. Germany’s largest builder Hochtief rose 3.4 percent, extending its previous session gains, as analysts remained positive on its rights issue announcement and news that Qatar was buying a stake.

The world’s biggest brickmaker Wienerberger rose 5.2 percent after two banks upgraded their price targets on the stock.

Wolseley, the world’s largest plumbers and builders merchant, was 2.7 percent higher after a forecast-beating first-quarter trading update.

Spanish wind energy firm Iberdrola Renovables gained 4 percent after UBS upgraded its stance to “buy” from “neutral” on valuation grounds.

Across Europe, the FTSE 100 index and Germany’s DAX both rose 0.7 percent, while France’s CAC 40 was up 1.6 percent higher.

(Reporting by Joanne Frearson; Editing by Will Waterman)

European shares end up on U.S. tax cuts