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RPT-European shares break losing streak; miners gain

Published 07/09/2009, 12:51 PM
Updated 07/09/2009, 12:56 PM
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(Repeats to detach from text of earlier report)

* FTSEurofirst 300 gains 0.8 pct after five days of decline

* Miners up on stronger metals prices, Alcoa results

* U.S. jobless claims lower than forecast

By Brian Gorman

LONDON, July 9 (Reuters) - European share markets closed higher on Thursday, bouncing after five days of losses, with miners and banks among those regaining some lost ground, .

The FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.8 percent at 823.32 points, below its high for the day of 829.88 and after falling for five sessions in a row.

The benchmark is up more than 27 percent form the lifetime low in early March but the rally stalled last month on concerns about the pace of global economic recovery and corporate profits. The index hit a 10-week closing low on Wednesday.

"Markets are gaining back some of the losses, but the choppy performance will continue," said Gerhard Schwarz, head of global equity strategy at UniCredit, in Munich.

The market is likely to stay in a consolidation phase for some time, rather than see any major correction on the downside, he added.

Miners rose as the price of copper and other metals rose sharply, following recent weakness.

Anglo American , Antofagasta , Rio Tinto and Xstrata rose between 2.6 and 5.6 percent.

Fresnillo rose 10.1 percent after Citigroup raised its rating to "buy" from "hold".

The sector was also boosted by strong results from U.S. aluminium giant Alcoa , which opened the second-quarter reporting season late on Wednesday.

Investors continue to face mixed signals on the strength of economic recovery. The number of U.S. workers filing new claims for jobless benefits fell sharply last week though the data was distorted by an unusual pattern of layoffs in the automotive industry, which amplified the decline. [ID:nN09442078]

One reason for the market's poor performance in recent days was U.S. unemployment numbers released on July 2 coming in well above forecasts.

The heavyweight banking sector added most points to the index.

UBS ended 2.9 percent higher as investors bet the United States would not go as far as shutting down UBS there in a dispute over tax, instead expecting the Swiss bank to be hit by a hefty fine as part of a swift out-of-court settlement. [ID:nL9200167]

Deutsche Bank gained 4.6 percent after DZ Bank added the company to its Germany top-10 list of recommended stocks.

Banco Santander , Credit Suisse , HSBC and UniCredit rose between 1.4 and 2.5 percent.

TECHNIP RISES

Oil services company Technip rose 4.9 percent after Nomura upgraded it to "neutral" from "reduce".

Several defensive stocks declined, having been among the best performers during the market's decline in the past few days.

Telecoms giant Vodafone closed 1 percent lower. Among pharmaceuticals, Roche , AstraZeneca and Novartis fell between 0.6 and 0.9 percent.

UK insurer Aviva fell 4 percent, extending its decline this week to more than 14 percent, on continued worries it may have to cut its dividend.

The International Monetary Fund raised its 2010 global growth outlook, but warned that neither the economy nor the banking industry at the heart of the financial crisis were strong enough to do without heavy public spending and cheap central bank funds.

Leaders of the Group of Eight industrial nations meeting in Italy agreed that in spite of rounds of interest rate cuts and an estimated $5 trillion in public spending, it was much too early to cut off economic lifelines.

The Bank of England surprised markets by announcing no expansion of its quantitative easing scheme as it left interest rates unchanged at a record low of 0.5 percent for a fourth month running. [ID:nTAR005441]

Across Europe, the FTSE 100 index <.FTSE>, Germany's DAX <.GDAXI> and France's CAC 40 <.FCHI> were up 0.5-1.3 percent

Wall Street was mixed as European bourses were closing. The Dow Jones <.DJI> was down 0.1 percent; the S&P 500 <.SPX> and Nasdaq Composite <.IXIC> were up 0.3 and 0.2 percent respectively. (Additional reporting by Atul Prakash; Editing by Greg Mahlich)

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