Miners boost European shares, aided by China data

Wed Apr 10, 2013 4:39am EDT

* FTSEurofirst 300 up 0.7 percent

* Miners boosted by Chinese imports data

* Vedanta firms after solid production figures

By Tricia Wright

LONDON, April 10 (Reuters) - European shares advanced on Wednesday as Chinese trade data boosted miners on hopes for improving demand and with technical analysts anticipating the market to remain buoyant near-term.

The FTSEurofirst 300 was up 0.7 percent at 1,172.88 by 0804 GMT, tracking gains on Wall Street where the Dow Jones industrial average closed at a record high on Tuesday.

The euro zone's blue-chip Euro STOXX 50 was 0.9 percent firmer at 2,619.17.

"I can't see Europe breaking aggressively lower while U.S. equity markets are holding up," Barclays Capital analyst Lynnden Branigan said.

"Once the U.S. equities start to turn, I think we will start to see the European equities start to break down a little bit," he said, noting that should the Euro STOXX 50 breach range lows at 2,563, it could drop to a late November low of 2,522.

Mining stocks found favour, boosted by Chinese trade data which suggested domestic demand from the world's top metals consumer was gathering pace.

The Chinese data partly mitigated the subdued mood that has capped European equity markets in the past week, as three separate U.S. jobs reports came in worse than expected, cooling optimism about the health of the world's largest economy.

Solid production figures from Vedanta Resources also helped sentiment, with the stock gaining 2.7 percent

The miners added to sharp gains seen on Tuesday in the wake of forecast-beating earnings from U.S. aluminium group Alcoa along with benign inflation data from China which fuelled expectations that its monetary stimulus would stay in place.

Atif Latif, director of trading at Guardian Stockbrokers, has started to move back into the sector, pointing out that current prices do not reflect stronger demand from China.

Miners have slid almost 12 percent in 2013 on concerns over falling demand, with its 12-month forward price/earnings ratio at 11.04 times against the STOXX 600 on 12.29 times, according to Thomson Reuters data.

Other investors, however, were more bearish.

"The mining sector remains at risk of over-investment with many new mines coming online in the near future and I fear the bottom has not been reached yet," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million in assets.

Changes in analyst recommendations were behind a number of movers on Wednesday.

An upgrade by Exane analysts to "outperform" help to lift French defence electronics group Thales 2.8 percent, reversing a recent slide.

And British carrier easyJet jumped 3.8 percent after Citi lifted its rating on the stock to "buy", according to traders, citing sustainably-positive free cash flow generation.

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