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Strong miners, property issues lift Europe shares

Published 11/25/2010, 12:48 PM
Updated 11/25/2010, 12:52 PM
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* FTSEurofirst 300 index rises 0.5 percent

* Miners rise as metals prices edge up

* Capital Shopping Centres jumps on bid interest

By Harpreet Bhal

LONDON, Nov 25 (Reuters) - European shares ended higher on Thursday, with heavyweight mining shares boosted by rising metals prices and bid interest in Capital Shopping Centres lifting the real estate sector.

The pan-European FTSEurofirst 300 index of top shares ended 0.5 percent higher at 1,092.80 points, though trading was light as U.S. markets were closed for the Thanksgiving Day holiday.

The STOXX Europe 600 basic resources index gained 2.1 percent, as metals prices were boosted by a weak dollar and upbeat U.S. economic data in the previous session.

However, worries over the euro zone debt troubles persisted, putting pressure on some peripheral euro zone banking stocks, with investors concerned about the risk of Ireland's debt problems spilling over into Portugal and Spain.

Allied Irish Banks tumbled 5.9 percent, while Spain's Banco Popular and Portugal's Millennium bcp shed 0.6 and 0.8 percent, respectively.

"The tensions in the euro zone are still an important factor for equity markets, and these tensions have led to a very strong diverging performance among national equity markets," said Tammo Greetfeld, equity strategist at UniCredit Group in Munich.

"The DAX is continuing to show strong signs of relative strength due to good fundamentals compared to other markets. The Spanish market, for instance, is increasingly under pressure as bond yields in Spain are rising."

While Britain's FTSE 100, Germany's DAX and France's CAC 40 rose between 0.3 and 0.8 percent, the Thomson Reuters Peripheral Eurozone Countries Index added only 0.1 percent.

A parliamentary by-election in Ireland on Thursday is expected to cut the government's majority to just two seats, increasing the risk that the 2011 budget, a key step in its plans to address its debt crisis, might not make it through parliament on Dec. 7.

"The debt crisis has to be resolved fast, otherwise confidence is going to slip. At that point, no economic data will help, and we will have a serious correction," said Koen De Leus, strategist at KBC Securities.

PROPERTY STOCKS RISE

Capital Shopping Centres climbed 12.9 percent on bid interest from U.S. shareholder Simon Property.

Within the sector, Hammerson, Land Securities Group and British Land rose 2.4 to 4.8 percent, highlighting the strength of investor demand for quality property assets in Britain.

Brokers notes also helped selected stocks push higher.

German steelmakers ThyssenKrupp and Kloeckner gained 4.1 percent and 7.4 percent, respectively, after analysts said European market conditions were improving.

UBS raised its price target for ThyssenKrupp, while Goldman Sachs increased its target for Kloeckner.

French bank Natixis rose 3.7 percent after its chief executive made positive comments on the impact of Basel III rules in an interview with newspaper Les Echos. (Additional reporting by Atul Prakash; Editing by Will Waterman)

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