Mining rally pushes European shares to three-week highs

LONDON (Reuters) - European equities extended the previous session’s strong rally to a three-week high on Friday, with stronger miners on the back of firmer metals prices and some encouraging company updates supporting the market.

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, February 25, 2016. REUTERS/Staff/Remote

However, state-backed Royal Bank of Scotland RBS.L slumped more than 7 percent after reporting its eighth straight full-year loss of 1.97 billion pounds ($2.75 billion) as it continued to be weighed down by restructuring and litigation costs.

Jefferies analysts called RBS results “disappointing”.

Miners topped the leaderboard, with the STOXX Europe 600 Basic Resources index .SXPP gaining 3.2 percent following sharp gains in the prices of key industrial metals such as copper CMCU3 and aluminium CMAL3.

Shares in Glencore GLEN.L, BHP Billiton BLT.L and Rio Tinto RIO.L rose 4.3 to 6.4 percent, helping the pan-European FTSEurofirst 300 index .FTEU3 to gain 1.8 percent.

Earlier in the session, the index climbed up to 1,308.99 points, its highest level since early February. It closed 2 percent higher in the previous session and headed for its second positive week in a row.

The market also got support from gains in Asia following some reassuring comments from world finance leaders. Setting the tone for the Shanghai meeting of the Group of 20, China’s central bank chief, Zhou Xiaochuan, said Beijing still had the room and tools to support the world’s second largest economy.

“Growing speculations that the PBoC (People’s Bank of China) might be taking additional measures soon to boost growth is fuelling the positive sentiment this morning,” said Markus Huber, trader at City of London Markets.

“Overall sentiment is positive as markets are closing in towards the highs of the current trading range.”

The market was also helped by company updates, with Spain's Amadeus AMA.MC gaining 4.3 percent after saying it was targeting a dividend pay out of 50 percent of reported profits in 2016.

Satellite operator SES SESFd.PA rose 5.6 percent after forecasting steady to slightly higher revenue this year after increased earnings in 2015 due to a higher dollar.

Editing by Toby Chopra