European shares make biggest weekly gain in a year

By Joanne Frearson

LONDON (BestGrowthStock) – European shares rose on Friday, posting their biggest weekly rise in a year, as worries about the global economy and banks’ stress tests moved to the back burner while investors’ focus turned to next week’s earnings.

Mining shares featured among the top performers as base metals prices gained on hopes for strong Chinese imports and a positive earnings season that U.S. aluminum giant Alcoa (AA.N: ) will kick off on Monday.

Anglo American (AAL.L: ), BHP Billiton (BLT.L: ), Rio Tinto (RIO.L: ) and Xstrata (XTA.L: ) rose 0.4 to 3.2 percent.

Antofagasta (ANTO.L: ) gained 4.1 percent after Citigroup raised its rating for the Chilean copper miner to “buy” from “hold” on valuation grounds based on its cash generation capabilities.

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares closed up 0.6 percent at 1,021.78 points and gained 5.4 percent for the week, its biggest weekly rise since July 2009.

“It felt like the week started with equities oversold and I would have thought investors would be putting shorts back on as markets rose,” said Jim Wood-Smith, head of research at Williams de Broe. “But, sentiment is improving and fears of a double dip recession are receding.”

Across Europe, the FTSE 100 (.FTSE: ) index, Germany’s DAX (.GDAXI: ) and France’s CAC 40 (.FCHI: ) all rose 0.5 percent.

The Thomson Reuters Peripheral Eurozone Countries Index (.TRXFLDPIPU: ) gained 0.4 percent.

BANKS UP

Banks were in demand on hopes the sector will pass the industry stress tests and after U.S. bank State Street (STT.N: ) said its earnings would beat forecasts.

Lloyds Banking Group (LLOY.L: ), Nordea Bank (NDA.ST: ) and Standard Chartered (STAN.L: ) gained 1.4 to 2.8 percent.

Next week investors will closely watch earnings from U.S. banks JPMorgan Chase & Co. (JPM.N: ) and Bank of America (BAC.N: ).

“Q2 results will be good, albeit they might not surprise on the upside as much as in the past three earnings seasons. But the main focus will be on the guidance, that will be the real focus,” said Dominique Netter, head of strategic asset allocation at La Compagnie Financiere Edmond de Rothschild, in Paris.

Meanwhile, European finance ministers will shift their focus next week onto a possible need for their banks to raise more capital and on who will cover any shortfalls exposed by stress tests — a sum which Credit Suisse estimated could reach 90 billion euros ($114 billion).

(Additional reporting by Blaise Robinson; Editing by Jon Loades-Carter)

European shares make biggest weekly gain in a year