February 14, 2011 / 10:04 AM / 8 years ago

China helps European shares gain; commods rise

* FTSEurofirst 300 index up 0.5 percent

* Commodity stocks gain on China inflation talk, trade data

* Weir Group, Invensys up on Siemens M&A talk

* For up-to-the minute market news, click on [STXNEWS/EU]

By Joanne Frearson

LONDON, Feb 14 (Reuters) - European shares rose on Monday to a 29 month high as talk of slower-than-expected Chinese inflation data and strong China trade figures boosted sentiment, with commodity stocks the major risers.

By 0951 GMT, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 0.5 percent at 1,179.51 points, its highest level since Sept. 4 2008, extending gains from Friday after the Egyptian President Hosni Mubarak stepped down.

“The talk of the Chinese inflation data and the export and import data is going to boost the market,” Heino Ruland, strategist at Ruland Research in Frankfurt said.

“Inflation has been the major worry and there has been a fear of monetary overkill, but until the data is released (on Tuesday) we could see a bit of volatility in the market.”

Traders said China’s consumer price index may have risen 4.9 percent in the year to January, well below the forecast of 5.3 percent, but they added it might have been the result of changes to the weighting of the consumer price index (CPI).

Meanwhile, China’s trade surplus fell, with surprisingly strong imports highlighting the country’s massive appetite for raw materials and its solid export growth hinting at solidifying recoveries in the U.S. and European economies. [ID:nTOE71A01I]

Mining stocks gained on the China news, tracking copper prices MCU3=LX higher on hopes of continued restocking by the world’s top consumer.

The STOXX Europe 600 Basic Resources .SXPP jumped 1.4 percent, while BHP Billiton BLT.L, Xstrata XTA.L and Rio Tinto (RIO.L) were 0.7 to 1.2 percent higher.

Oils were also in demand. Galp Energia (GALP.LS) rose 3.1 percent, adding to the gains made in the previous session when it reported profits at the high end of forecasts.

John Wood Group (WG.L) jumped 13.8 percent after the energy services group agrees to sell its well support division to General Electric (GE.N) for $2.8 billion. [ID:nN13242867]

INVENSYS, WEIR RISES ON M&A TALK

Invensys ISYS.L and Weir Group (WEIR.L) rose 4.7 percent and 5 percent, respectively, as traders cited takeover speculation after Siemens’ (SIEGn.DE) chief financial officer told the Financial Times it is looking for large-scale acquisitions.

“Invensys is an old target,” said one trader.

“Bid rumour that Siemens coming in for them,” another trader said, referring to both Weir and Invensys.

Credit Suisse CSGN.VX gained 3.5 percent after the Swiss bank said it will issue 6 billion Swiss francs ($6.2 billion) of contingent convertible capital bonds in a move to satisfy stricter capital rules. [ID:nLDE71D039]

On the downside, Nokia NOK1V.HE fell 3.1 percent, extending its drop from the previous session, with JP Morgan downgrading the stock to “underweight” from “overweight”.

In other news, European finance ministers will discuss how to give their euro zone rescue fund more flexibility and firepower and how to tackle debt crises after 2013, but final decisions are unlikely before March. [ID:nLDE71C0BT]

Across Europe, the FTSE 100 .FTSE index was 0.1 percent higher, Germany's DAX .GDAXI was up 0.4 percent and France's CAC 40 .FCHI gained 0.3 percent. (Reporting by Joanne Frearson; Editing by Hans Peters)

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