Miners bolster European shares after Chinese data

Mon Jun 2, 2014 12:30pm EDT

* FTSEurofirst 300 index climbs 0.2 percent

* Chinese factory activity lifts miners

* Strong PMIs help Spain but France weak

By Tricia Wright

LONDON, June 2 (Reuters) - European shares started the month positively on Monday, buoyed by upbeat economic data from China that helped to allay worries about growth rates there.

Basic resources stocks, including miners and other commodity companies, rose 1.5 percent, one of the biggest sectoral gainers, after data showed Chinese factory activity expanded at its fastest pace in five months in May.

Miners, acutely sensitive to the health of the Chinese economy since it is the top metals consumer, had fallen on Friday on concern over China - which, alongside lacklustre growth globally, has deterred recent investment into the sector.

Miners have risen less than 2 percent this year, against a 5.1 percent advance for the STOXX Europe 600. Mining giant Rio Tinto is languishing around 2014 lows while the broader index is trading at its peak for the year.

The sector might have seen a burst higher on Monday, but these gains could prove short-lived.

"I would say at this level it is a trading (relatively short-term) buy," Paul Kavanagh, partner at Killik & Co., said.

"The type of investor that you'll find at this point in the cycle tends to be more of a speculator who will find a bottom on these stocks."

The pan-European FTSEurofirst 300 index closed up 0.2 percent at 1,380.46 points.

France's CAC index underperformed the broader market, dipping 0.1 percent, as data showed French manufacturing contracted again in May, having recorded its first two months of growth since 2011 in March and April.

Spain's blue-chip IBEX gained 0.3 percent after its manufacturing sector expanded at the fastest rate since April 2010.

Germany's DAX firmed 0.1 percent, or 6.85 points, to 9,950.12, within touching distance of breaking the 10,000 mark for the first time.

Whether it will be able to pass this barrier is linked to whether expectations of stimulus from the European Central Bank later in the week are delivered on, analysts said.

"The ECB meeting on Thursday ... has already given the markets some solid impulses during the previous weeks when investors had growing hope on a more expansive approach," Roger Peeters, who runs Close Brothers Seydler Research, said in a note.

"The wording on the further goings-on will be critical for the development in the markets during the next months."

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 Alistair Smout; Editing by Susan Fenton)

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