Strong miners boost Europe shares; Greek banks dip

By Atul Prakash

LONDON (BestGrowthStock) – European shares ended at their highest level in nearly a week on Monday as strong U.S. economic numbers on Friday and encouraging earnings boosted sentiment, although Greece’s debt situation prompted investors to stay cautious.

The FTSEurofirst 300 (.FTEU3: ) index of top European shares finished up 1 percent at 1,103.00 points, the highest close since April 20. The index has surged about 71 percent since hitting a record low in March last year.

Optimism about economic growth and commodity demand helped the mining sector, which was also supported by a rise in key base metals prices. Copper hit a one-week high.

BHP Billiton (BLT.L: ), Anglo American (AAL.L: ), Antofagasta (ANTO.L: ), Rio Tinto (RIO.L: ), Xstrata (XTA.L: ) and Eurasian Natural Resources (ENRC.L: ) jumped 1.9 to 7.1 percent.

“The equity markets are rising despite the problems we see in Greece. What is saving the market is the solid macro-momentum that we currently see and the good first-quarter earnings season in the U.S.,” said Klaus Wiener, head of research at Generali Investments.

Figures on Friday showed that new orders for durable U.S. manufactured goods excluding transportation posted the largest gain in over two years in March, while home sales hit an eight-month high, hinting at a pick-up in the pace of growth.

European banks were broadly higher, with the STOXX Europe 600 banking index (.SX7P: ) rising 1.4 percent. HSBC (HSBA.L: ), Barclays (BARC.L: ), Lloyds (LLOY.L: ), Royal Bank of Scotland (RBS.L: ), BNP Paribas (BNPP.PA: ), Societe Generale (SOGN.PA: ) and Natixis (CNAT.PA: ) climbed 0.6 to 5.4 percent.

But Greek banks (.FTATBNK: ) shed 2.7 percent, with National Bank (NBGr.AT: ), EFG Eurobank (EFGr.AT: ) and Bank of Piraeus (BOPr.AT: ) falling 3.6 percent to 5.2 percent.

“It (Greece) has reassured the market that the risk of a default is much less than previously thought last week … but there is still an element of doubt and that’s why the market is volatile,” said Joshua Raymond, market strategist at City Index.

Germany called for a financial rescue to be ready for Greece by a May 19 debt deadline after uncertainty over the terms and implementation of the aid package pushed Athens’s borrowing costs up to a 12-year high.

Greece’s efforts to reassure investors that aid would arrive in time to avert the euro zone’s first sovereign debt default proved unconvincing, and there were signs a 45 billion euro ($60.49 billion) EU-IMF aid package would have to be bigger.

AUTOMAKERS ADVANCE

Analysts said the Greek issue will ultimately get resolved.

“There will be a solution. The EU and the IMF will make sure that Greece gets the liquidity they need. At the same time, they will attach strong conditionality. Looking a bit down the road, the tension regarding Greece will be easing a bit,” Wiener said.

Bank of Ireland (BKIR.I: ) was up 5 percent. It launched a plan to raise 3.4 billion euros ($4.6 billion) without resorting to further state cash in a package the Irish government hopes will help differentiate it from Greece’s woes.

Automakers were also higher on hopes that demand for vehicles will pick up. BMW (BMWG.DE: ), Daimler AG (DAIGn.DE: ), Porsche (PSHG_p.DE: ), Volkswagen AG (VOWG.DE: ), Peugeot (PEUP.PA: ) and Renault (RENA.PA: ) gained 0.1 to 1.6 percent.

Among individual movers, Dutch navigation device maker TomTom (TOM2.AS: ) surged 9.8 percent after reporting better-than-expected first-quarter profit (Read more your timing to make a profit.).

Industrial conglomerate Siemens (SIEGn.DE: ) added 4 percent. German magazine Euro am Sonntag cited sources as saying the company is set to raise its profit forecast and post record earnings in 2009-2010.

Chloride Group (CHLD.L: ) surged 42 percent after it rejected a 723 million pound ($1.1 billion) approach from Emerson Electric (EMR.N: ), with the U.S. industrials group expected to improve its offer to seal a deal this time around.

(Additional reporting by Harpreet Bhal; Editing by Rupert Winchester)

Strong miners boost Europe shares; Greek banks dip