Miners lead European shares to 27-month high

By Brian Gorman

LONDON (BestGrowthStock) – Miners led European shares to a fresh 27-month high in holiday-thinned trade on Tuesday, with copper hitting a record on supply concerns and a weaker dollar.

At 1140 GMT (6:40 a.m. ET), the FTSEurofirst 300 index of top European shares was up 0.6 percent at 1,140.38, having touched its highest level since September 2008.

The market was supported by China saying it backed steps taken by European authorities to tackle the region’s debt problems. North Korea’s promise to a U.S. envoy to allow in U.N. inspectors also boosted sentiment.

“There are a number of factors driving equity markets higher. Investors have calmed down about Korea — that was an issue last week,” said Bob Parker, senior adviser at Credit Suisse.

“The big bond market sell-off has stabilized. Economic news coming out of Northern Europe, including Germany, has been good. Our thesis is that Europe will muddle through this (sovereign debt) crisis,” he said

Heavyweight miners were among the top gainers after London copper prices hit a record high on Tuesday, buoyed by supply concerns after Chile’s Collahuasi mine halted shipments, and a weaker dollar.

Anglo American, BHP Billiton and Rio Tinto rose 2.0-2.5 percent.

Australia’s biggest mining companies may have won a long-running battle with Prime Minister Julia Gillard after a tax panel recommended the government pick up future state royalty payments under its mine tax reform package.

Chemical shares gained. DSM and Akzo Nobel rose 4.4 percent and 2 percent respectively after KBC raised its price target for DSM and upgraded Akzo to “buy” from “accumulate.”

DSM said it was buying U.S. baby food ingredients maker Martek Biosciences Corp for $1.1 billion.

Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC40 rose 0.5-0.7 percent.

The technical picture also improved. The Euro STOXX 50, the euro zone’s blue-chip index, hovered above its 50-day moving average and a 38.2 percent Fibonacci retracement of a major fall to a trough in 2009 from a high in 2007.


Among individual shares, UPM-Kymmene climbed 6.7 percent. The forestry group is to buy debt-laden Finnish paper maker Myllykoski and partner Rhein Papier in a 900 million euro deal, bringing much needed consolidation to Europe’s paper industry.

Rival Stora Enso rose 7.9 percent.

Parker cited expectations of strong fourth-quarter earnings for European companies as another reason for the market’s strength.

“The most important reason for the move, however, is seasonality,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, in Brussels.

“This is the traditionally best season of the year. On top of this, active money managers have had one of the worst years in history. So, they try to play catch-up and buy every dip. We expect markets to remain well supported into the New Year.”

Moody’s Investors Service said it may cut debt-laden Portugal’s A1 rating by one or two notches after a review that will take no more than three months.

(Additional reporting by Atul Prakash; Editing by Dan Lalor)

Miners lead European shares to 27-month high