European shares hit 3-week closing high on results

By Atul Prakash

LONDON (BestGrowthStock) – European shares hit a three-week closing high on Wednesday, driven by strong U.S. company results and growing expectations of fresh economic stimulus, with miners topping the risers on hopes of improving raw materials demand.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares ended 1.4 percent firmer at 1,086.52 points, the highest close since September 20. Stocks traded on NYSE Euronext were briefly affected by technical problems.

Germany’s DAX index (.GDAXI: ) hit a two-year high, while the blue-chip Euro STOXX 50 (.STOXX50E: ) rose 2.3 percent to 2,840.55, breaching a key resistance point of 2,740.32, its 61.8 percent retracement of an April high to a May low.

Miners featured among the top gainers, with the STOXX Europe 600 basic resources index (.SXPP: ) surging 3.4 percent. BHP Billiton (BLT.L: ), Anglo American (AAL.L: ), Antofagasta (ANTO.L: ), Rio Tinto (RIO.L: ) and Xstrata (XTA.L: ) jumped 4.2 to 5.6 percent.

“Another bumper day of gains as the market gets drunk on the prospect of quantitative easing mark 2. The bulls have also been well supported by a great start to the third-quarter earnings session in the U.S.,” said Angus Campbell, head of sales at Capital Spreads.

“If companies continue to generate cash and good profit figures, then they will always attract investors. Even though a large swath of the economy is feeling the pinch and with the prospect of worse to come, investing in cash-rich, high-yielding companies is a good place to put any spare funds.”

JPMorgan Chase & Co (JPM.N: ) posted a 23 percent increase in quarterly profit, beating expectations, while Intel (INTC.O: ) forecast on Tuesday upbeat fourth-quarter sales and margins as resilient demand from emerging markets and corporations offset weak consumer spending.

Tech shares advanced, with the STOXX Europe 600 Technology Index (.SX8P: ) rising 2.2 percent, also supported by ASML’s (ASML.AS: ) profit-beating results. ASML climbed 5 percent, while Infineon (IFXGn.DE: ), STMicroelectronics (STM.PA: ) and Aixtron (AIXGn.DE: ) gained 2.4 to 10.2 percent.

FED BOOST

Sentiment improved following the release of minutes of the U.S. Federal Reserve’s September 21 meeting late on Tuesday.

“Global markets have enjoyed the boost that yesterday’s FOMC minutes delivered, with the suggestion that policy makers are preparing to inject more cash into the economy sending investors back to more volatile equities,” said Yusuf Heusen, senior sales trader at IG Index.

The minutes showed officials thought the struggling U.S. recovery might soon need more help. They discussed ways to provide it, including possible adoption of a price-level target and buying more longer-term government debt.

Appetite for risky assets such as equities jumped, with the VDAX-NEW volatility index (.V1XI: ) hitting a six-month low. The lower the index, the higher the market’s desire to take risk.

Banks were also stronger. The STOXX Europe 600 banking index (.SX7P: ) rose 1.4 percent, while BNP Paribas (BNPP.PA: ), UBS (UBSN.VX: ) and Deutsche Bank (DBKGn.DE: ) gained 2.6 to 4 percent.

Asia-focused Standard Chartered (STAN.L: ), however, fell 1.7 percent after it launched a $5.3 billion rights issue.

Macroeconomic numbers also added to the positive tone. U.S. mortgage applications for home refinancing loans rose for the first time in six weeks, with demand jumping to its highest level since late August.

(Additional reporting by Simon Jessop; Editing by Erica Billingham)

European shares hit 3-week closing high on results