Miners lift Europe shares to end 3 days of falls

By Harpreet Bhal

LONDON (BestGrowthStock) – European shares rose on Monday, with miners recouping losses from the previous week on a strong demand outlook for metals, but gains were limited by worries that the euro zone’s debt crisis could hamper the bloc’s growth.

The pan-European FTSEurofirst 300 (.FTEU3: ) index of top shares closed up 0.3 percent at 973.21 points, snapping three straight sessions of losses which caused an 8 percent drop in the index.

Miners Anglo American (AAL.L: ), Kazakhmys (KAZ.L: ), BHP Billiton (BLT.L: ) and Rio Tinto (RIO.L: ) added 0.7 to 2 percent, on a bright outlook for the demand for metals following comments by an official that China should be particularly cautious in introducing new tightening measures.

Spanish banks fell after the Bank of Spain on Saturday took over the running of CajaSur following the failure of its planned merger with another regional lender, signaling structural problems facing fiscally fragile euro zone states and pressuring the euro.

“It (the bailout in Spain) sends a very clear and present warning to the market that the debt crisis could have a particularly negative effect on some of the banks that are directly exposed to sovereign debt,” said Joshua Raymond, strategist at City Index.

Banco Santander (SAN.MC: ) and BBVA (BBVA.MC: ) were off 1.2 and 2 percent respectively.

“Trading has been choppy… which represents how much uncertainty there remains in the market and just how fragile confidence is so far,” Raymond said.

Defensive tobacco and beverage stocks, which are deemed to be resilient in tough economic conditions, also rose as risk aversion crept up.

SABMiller (SAB.L: ), Heineken (HEIN.AS: ) and Anheuser-Busch InBev (ABI.BR: ) rose 1.3 to 2.5 percent, while British American Tobacco (BATS.L: ) and Imperial Tobacco (IMT.L: ) added 0.8 and 2.1 percent respectively.


On the economic front, investors drew some support from an unexpected jump in the sales of previously owned U.S. homes in April to a five-month high as buyers rushed to close contracts before the expiry of a homebuyer tax credit.

The market closely watched details of spending cuts in Britain, as the finance minister George Osborne detailed 6.2 billion pounds ($8.92 billion) in belt-tightening measures and warned much worse lay ahead in an emergency budget next month.

Among other fallers, BP (BP.L: ) shed 2.7 percent. The oil major is facing growing pressure from the U.S. government to resolve an spill in the Gulf of Mexico, and said it had a 60-70 percent chance of success in plans this week to shut off its blown well.

Across Europe, Britain’s FTSE 100 (.FTSE: ) rose 0.1 percent, Germany’s DAX (.GDAXI: ) fell 0.4 percent and France’s CAC 40 (.FCHI: ) closed flat.

Markets in Austria, Switzerland, Greece, Denmark and Norway were closed on Monday for a public holiday.

($1=.6951 Pound)

Stock Market Advice

(Editing by Jon Loades-Carter)

Miners lift Europe shares to end 3 days of falls