Rallying miners hoist European shares to fresh six-year high
* FTSEurofirst 300, Euro STOXX 50 both up 0.5 pct
* Miners gain as JPMorgan upgrades sector to "overweight"
* Investors welcome dovish comments from Nowotny
* Alstom up on German support for Siemens tie-up
By Tricia Wright
LONDON, May 12 (Reuters) - European stocks scaled new six-year highs on Monday, boosted by miners on a bullish note from JPMorgan, while investors also welcomed dovish comments from European Central Bank policymaker Ewald Nowotny.
Miners were the best performers across Europe after JPMorgan upgraded them to "overweight" from "underweight", saying it was shifting funds into the beaten-down mining sector from autos, which have seen strong share price gains.
Rio Tinto and BHP Billiton, which the investment bank viewed as the most attractive stocks in the sector, climbed 4 percent and 2.4 percent respectively, against a 2.3 percent rise for the sector as a whole.
"We believe the risk-reward for miners is improving ... We are taking funds from autos, moving them from OW ('overweight') to N ('neutral'). The sector valuations do not look as attractive any more due to exceptional past performance," JPMorgan said in a note.
In the last 12 months, miners have risen about 5 percent, contrasting with a near 40 percent gain for autos.
The mining sector accounted for around a fifth of the FTSEurofirst 300's rise on Monday.
The index was up 0.5 percent at 1,362.49 points by 1054 GMT, a whisker away from a fresh six-year high reached earlier on Monday, at 1,363.05. The euro zone's blue-chip Euro STOXX 50 index also rose 0.5 percent, to 3,199.22.
Comments from ECB policymaker Nowotny also underpinned equity markets, traders said. An interest rate cut alone would probably not be enough to combat low inflation in the euro zone, he said, adding he would favour a "package" of measures.
A burst of dealmaking and bids alongside some good news on earnings and the possibility of more stimulus steps from the ECB in June has bolstered European equities in recent weeks.
On Monday, France's Alstom rallied after Germany said it would support a takeover by Siemens.
Alstom - which is reviewing a bid by U.S. giant General Electric for its energy businesses - climbed 2.7 percent after Chancellor Angela Merkel said on Saturday the German government would support a tie-up between Siemens and Alstom if the companies decide that it would make sense.
But the market might have reached a ceiling, for now.
Lofty valuations are preventing investors from putting more money to work in equities. The rebound in corporate dealmaking could go some way to offset this situation, but some analysts are taking a bearish short-term view on markets.
The STOXX Europe 600 trades on a 12-month forward price/earnings ratio of about 14 times, against its 10-year average of around 12 times, Thomson Reuters Datastream shows.
"I think on a one- to two-month view, I'd be reasonably cautious now. The M&A might continue to bail us out a bit, but I think on the other fundamentals it's looking a little bit toppy," Peel Hunt equity strategist Ian Williams said.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Additional reporting by Blaise Robinson; Editing by Susan Fenton)