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Miners fall as European shares waver after China data
July 10, 2013 / 11:47 AM / 4 years ago

Miners fall as European shares waver after China data

* FTSEurofirst 300 shed 0.2 pct to 1,186.07

* Miners fall 1 pct as China fuels outlook worries

* Burberry gains as analysts cheer update

* Italy yields rise after S&P downgrade

By David Brett

LONDON, July 10 (Reuters) - European shares eased by midday on Wednesday as weak Chinese trade data took the wind out of miners’ sails, with investors cautious before the release of Federal Reserve minutes and a speech by Fed chief Ben Bernanke.

Basic resources fell 1.1 percent, paring gains made over the past two sessions, after China, the world’s biggest consumer of raw materials, said exports unexpectedly fell in June and that the outlook for trade was “grim”.

By 1025 GMT, the FTSEurofirst 300 fell 2.88 points, or 0.2 percent to 1,186.07.

Richard Perry, chief market strategist at Central Markets, said more weak Chinese data had turned market sentiment mildly negative. Investors were also reluctant to put on firm bets ahead of the publication of minutes from the Fed’s June meeting and Bernanke’s speech, which may offers clues to the likely pace of withdrawal of U.S. monetary stimulus.

“It is difficult to see the Fed tapering (asset purchases) sooner than September. However, the next game the market may play is how fast the tapering will be once it begins,” he said.

Worries over the impending end to stimulus saw European shares tumble more than 30 percent from May highs to June lows. They have gained more than 6 percent since, after central bankers in Europe pledged to keep monetary policy loose.

Benoît Peloille, Investment strategist at Natixis, said he was not worried about the withdrawal of Fed stimulus.

“We continue to favour equities as an asset class as long-term rates are so low that the hunt for yield will continue. The upside potential to our end-of-year index target is around 5-10 percent on major European indexes,” he said.

Consumer-focused stocks were among the top gainers after a bullish update from Burberry and analyst upgrades for retailers such as Tesco.

Burberry rose 3.8 percent after the luxury goods brand maintained its full-year guidance and posted an 18 percent rise in first quarter underlying retail revenue.

UK retailers Tesco and Wm Morrison and Dutch firm Ahold rose as much as 1.7 percent after Exane BNP Paribas upgraded all three stocks.

Banks were mixed, with lenders in the euro zone periphery lower after S&P downgraded its sovereign credit rating for Italy. That pushed one-year debt costs in the country to their highest since March at an auction on Wednesday.

Germany’s Deutsche Bank added 1.7 percent after Credit Suisse upgraded the investment bank to “outperform”.

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