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Real estate shares help European stocks to rebound

Published 05/18/2011, 05:10 AM
Updated 05/18/2011, 05:12 AM
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* FTSEurofirst 300 up 0.6 pct, gains after 4-session losses

* Real estate, mining shares feature among top gainers

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Atul Prakash

LONDON, May 18 (Reuters) - European equities bounced back from four-week closing lows on Wednesday as strong results from Land Securities led real estate companies higher, while miners tracked a sharp rebound in key base metals prices.

The real estate sector <.SX86P>, up 2.8 percent, topped the gainers' list, supported by a 6.7-percent jump in Land Securities that posted a double-digit rise in full-year net asset value.

The company said it will continue speculatively developing offices to fill a central London under-supply that may be more acute than it expected. British Land rose 6.3 percent, while Hammerson added 4.9 percent.

At 0843 GMT, the FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.6 percent at 1,133.87 points after falling in the previous four sessions. The index fell 1 percent to its lowest close in four weeks on Tuesday.

The selloff in the previous sessions had prompted some investors to grab cheaper stocks, and while the medium-term outlook was more positive, near-term gains could be capped by concerns about economic recovery and the euro zone debt crisis.

"On the one side, there is some nervousness around as we have got a lot of dangers looming around, but on the other side investors are increasing their equity weightings that supports the market," Anko Beldsnijder, managing director of MainFirst Asset Management, which manages $1.1 billion.

"Shares are an attractive asset class versus other asset classes and we are witnessing that institutional investors are moving into equities. But I expect that we will be range-bound in the near term."

Miners drew strength from higher metals prices, which bounced back on technical factors and a drop in the dollar. The STOXX Europe 600 Basic Materials index <.SXPP> rose 1.3 percent, while Eurasian Natural Resources advanced 3.7 percent.

Eurasian also got a boost after Citigroup raised its rating on the stock to "buy from "hold" on valuation grounds.

MEDIUM-TERM OUTLOOK

Investors remained positive on the stock market's outlook in the medium term as equities were still cheaper than their historical averages and the earnings season was reasonably good.

"The outlook still looks very promising, the earnings are coming through and valuations are quite acceptable," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"But it seems to me that we are going to be stuck in a trading range for a little while."

According to Thomson Reuters Datastream, the STOXX Europe 600 <.STOXX> carries a one-year forward price-to-earnings of 10.7, against a 10-year average of 13.5.

Among individual movers, Deutsche Telekom rose 2.1 percent after Bank of America Merrill Lynch upgraded its rating on the company to "buy" from "neutral" while Citigroup raised its price target to 12.20 euros from 11 euros.

Yara International gained 2.7 percent to top the STOXX Europe 600 Chemicals <.SX4P> index, up 1.4 percent, after announcing higher-than-expected nitrate prices in Europe.

Across Europe, Britain's FTSE 100 <.FTSE>, Germany's DAX <.GDAXI> and France's CAC 40 <.FCHI> rose 1 to 1.1 percent. The Thomson Reuters Peripheral Eurozone Countries Index <.TRXFLDPIPU> was up 0.9 percent. (Editing by Louise Heavens)

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