European shares held in check by falls in mining stocks

Thu May 2, 2013 4:15am EDT

* FTSEurofirst up 0.37 point

* Miners fall, Randgold suffers after results

* BG, Shell firm on earnings beats

By Tricia Wright

LONDON, May 2 (Reuters) - European shares rose were slightly higher on Thursday, held back from larger gains by weaker basic resources stocks.

Randgold Resources, a mining company, was among the top fallers after it posted a drop in first-quarter profit.

The FTSEurofirst 300 was up 0.37 point at 1,201.90 by 0758 GMT, having risen almost 5 percent over the past two weeks partly in anticipation of the European Central Bank lowering its main interest rate by 25 basis points later in the day.

"I think you might see a big unwinding and blow out if they don't do it," said Joe Rundle, head of trading at ETX Capital.

He said that in the event of disappointment, the FTSEurofirst 300 would initially dip to the 50-day moving average, at 1,181 to "see if there's any support" and, if not, fall to 1,150 - around the start of the past two weeks' rally.

The STOXX Europe 600 Basic Resources sector was among the worst hit in early deals, down 0.9 percent, with Randgold down 4.7 percent after its results.

The weakness was countered by oil majors BG Group and Royal Dutch Shell, up 2.5 percent and 0.9 percent respectively, after earnings from the pair beat forecasts.

The euro zone's blue-chip Euro STOXX 50, which has seen gains of around 6 percent over the past two weeks in the run-up to the ECB meeting, traded 0.2 percent firmer at 2,718.07.

"My sense of the situation is that a rate cut has been largely discounted (in the move from 2,555 to 2,711) and, even if we see a minor surge on the news, it probably won't be long before selling pressures kick in again," Bill McNamara, technical analyst at Charles Stanley, said.

McNamara said that in the near term, the 2013 high of 2,754 is likely to cap gains and, in the event that the ECB fails to deliver, expected a "rapid retracement" of the recent rally down to 2,600.