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European shares lifted by miners; industrials fall

Published 02/02/2011, 07:35 AM
Updated 02/02/2011, 07:40 AM
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* FTSEurofirst 300 up 0.1 percent

* Miners boosted by strong copper prices

* Imperial Tobacco gains on sales rebound

* For up-to-the minute market news, click on

By Harpreet Bhal

LONDON, Feb 2 (Reuters) - European shares edged up on Wednesday, with miners boosted by confidence in the pace of economic recovery, though gains were tempered by falls in industrials after results from Scania and Sandvik.

By 1222 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.1 percent at 1,161.43 points, after ending at a two-week closing high on Tuesday.

The index has risen 3.6 percent since the beginning of the year.

Sentiment was boosted by economic data that pointed to a pickup in the pace of economic recovery, notably strong manufacturing figures from the United States and the euro zone, as well as brightening prospects for corporate earnings.

"We have seen the buyers come back in this week. Manufacturing data has been strong, and the earnings have been OK, so there is nothing out there to knock sentiment," said David Jones, chief market strategist at IG index.

Mining shares also advanced, with the STOXX Europe 600 basic resources index up 1.6 percent as copper prices surged to a record high near $10,000 a tonne.

Within the sector, Eurasian Natural Resources rose 2.4 percent after posting a 5.6 percent rise in fourth-quarter ferroalloy production.

Gains, however, were kept in check by falls in the STOXX Europe 600 industrial goods index after disappointing results from Swedish firms Scania and Sandvik.

Tool and machinery maker Sandvik fell 5.5 percent after fourth-quarter earnings missed expectations, hit by currency and metal price swings, while truck maker Scania fell 6 percent after it posted a smaller-than-expected rise in quarterly earnings.

Investors are looking ahead to U.S. ADP private employment data due later in the session, to gauge the recovery in the crucial labour market, particularly as job creation as been slow in the United States despite the wider economy showing signs of strength.

"The level of unemployment is still the key concern for the U.S. economy, so that is really going to be a focus for this year," Jones said.

POLITICAL WORRIES EASE

Receding fears about the impact of Egypt's political turmoil on world markets also helped underpin the rally, said a London-based trader at a leading U.S. investment bank.

"It looks like the issue will be resolved in a somewhat peaceful manner, which has put the market at ease," he said. "The market has more or less resumed the course it was on."

Egypt's armed forces on Wednesday told protesters clamouring for an end to President Hosni Mubarak's 30-year-rule that their demands had been heard and they must clear the streets.

Among individual movers in Europe, Imperial Tobacco rose 4.5 percent after it surprised investors with a return to volume growth in the last quarter of 2010.

On the downside, Electrolux shed 7.6 percent after fourth-quarter core earnings lagged forecasts.

Healthcare stocks were dragged lower by a 2 percent drop in Roche after the firm gave a cautious outlook for 2011 on U.S. healthcare reform and pricing pressure.

Within the sector, AstraZeneca and GlaxoSmithKline dropped 3.4 and 1 percent, respectively. (Additional reporting by Simon Jessop; Editing by Will Waterman)

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