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Miners lift European shares; data boosts sentiment

Published 11/24/2010, 07:09 AM
Updated 11/24/2010, 07:12 AM

* FTSEurofirst 300 up 0.5 percent

* Miners rise as metals prices rebound

* Concerns linger on peripheral euro zone debt situation

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

By Harpreet Bhal

LONDON, Nov 24 (Reuters) - European shares were higher at midday on Wednesday, boosted by strong German business sentiment data, though trading was choppy as concerns lingered over Ireland's debt crisis and political tension in Korea.

By 1155 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.5 percent at 1,081.95 points, rebounding from a six-week closing low in the previous session.

Data showed German business sentiment rose in November to its strongest level since 1991.

"It points to the improving momentum that we are seeing in the major economies. We are seeing momentum being regained again in the stalwart of the euro zone, Germany and also in the UK," said Mike Lenhoff, chief strategist at Brewin Dolphin.

Britain's economy grew 0.8 percent in the third quarter, boosted by net trade outflows, data showed

"The underlying support for earnings growth is still very solid and that is reflected in the sturdiness of these markets."

Mining stocks gained ground following a sell-off in the previous sessions, supported by firmer metal prices as the dollar eased.

Eurasian Natural Resources, Kazakhmys, BHP Billiton and Rio Tinto rose 0.9-2.4 percent.

Investors remained caution, however, as worries over the euro zone's debt situation lingered. Spanish and Portuguese bond yields rose sharply on concerns Ireland's debt troubles could spread to other peripheral euro zone countries after ratings agency Standard and Poor's cut Ireland's credit rating and placed it on credit watch negative.

The Irish government was set to unveil a four-year austerity plan on Wednesday aimed at cutting welfare spending and raising taxes to help end its financial crisis.

"There are still a lot of questions surrounding the bailout of Ireland and the budget on Dec. 7. The government is in a limbo and we do not know if it will go through," said Franz Wenzel, strategist at AXA Investment Managers in Paris.

Bank of Ireland shares slumped 24 percent, while Spanish lender Banco Santander shed 0.8 percent and Portuguese group Banco Espirito Santo lost 0.4 percent.

POLITICAL UNCERTAINTY

Political tension in the Korean peninsula added to jitters in the market after the North Korea's official KCNA news agency said South Korea's actions were "driving the situation to the brink of war".

On Tuesday. North Korea fired dozens of shells on a South Korean island, prompting a U.S. aircraft carrier group to set off to join exercises with South Korea from Sunday.

"The market has concerns over the ongoing situation in Korea," Wenzel said.

Among individual movers, British company Compass gained 3.5 percent after full-year profit beat forecasts and the world's biggest contract caterer raised its dividend.

On the downside, SAP fell 1.2 percent following a $1.3 billion fine for the German company for downloading rival Oracle's software.

Across Europe, the FTSE 100, Germany's DAX and France's CAC 40 were up 0.3-1.2 percent. (Additional reporting by Joanne Frearson; Editing by Dan Lalor)

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