European shares steadied close to two-month highs today, encouraged by gains in Asia and led by miners on upbeat data from China, the world’s top metals consumer.
The market was also helped by a report in the South China Morning Post saying authorities in Beijing were offering financial stimulus to key cities and provinces to bolster a slowing economy.
"China is the biggest buyer of commodities in the world so any stabilisation in its growth is going to help the world economy and miners are likely to be the biggest beneficiary," Koen De Leus, senior economist at KBC, in Brussels, said.
Chinese factory output grew in July at its fastest pace since the start of the year, data released on Friday showed.
Miners were today’s top European gainers, with the STOXX Europe 600 Basic Resources Index rising 0.7 per cent on the back of a 1.1 per cent rise in Rio Tinto a 2.4 per cent gain in Fresnillo.
At 07.27 GMT, the FTSEurofirst 300 index of top European shares was 0.05 per cent higher at 1,230.14 points after hitting an intra-day peak of 1,232.55, the highest since late May.
It is up more than 10 per cent since a low hit in late June. European traders took guidance from the Asian market, where Hong Kong’s Hang Seng index rose 2.1 per cent and the Shanghai Composite index was up 2.4 per cent as the market took heart from last week’s reassuring Chinese data.
However, investors were expected to trade cautiously and gains were likely to be capped on chances the US Federal Reserve might start trimming its stimulus measures sooner than expected.
“Investors should stay cautious in trading in the summer months as volatility will be high and US stimulus tapering concerns are in the background. Wait until September-October to place strong bets,” De Leus said.
Reuters
