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European shares supported by gains in mining and oil companies

European shares supported by gains in mining and oil companies

LONDON: European stocks steadied on Monday after falling at the end of last week in the wake of weak U.S. jobs data, as gains in the shares of major mining and oil companies propped up the region’s markets.

The pan-European STOXX 600 and FTSEurofirst 300 equity indexes were both flat, having fallen around 1 percent on Friday.

Last Friday’s weak U.S jobs data hit the U.S. dollar, but this in turn gave a lift to the commodity sector, since a weaker dollar makes commodities priced in that currency more affordable for consumers paying with other currencies.

Mining stocks such as Anglo American, Rio Tinto and BHP Billiton rose more than 5 percent as the price of copper climbed to its highest level in around 4 weeks.

“The mining sector is bouncing up on the back of the weaker dollar,” Hantec Markets’ analyst Richard Perry said.

The shares of oil majors such as BP and Total also rose as oil prices advanced.

However, shares in airlines Air France KLM, Lufthansa and International Consolidated Airlines Group all fell after analysts at Barclays cut their price targets on the stocks.

“Even if their margins are still rising thanks to fuel savings, many airlines across the globe would admit that demand is softer than anticipated,” Barclays wrote in a note.

Persistent concerns that Britain will vote to leave the European Union in a referendum on June 23 also kept investors on edge.

While this was being played out more on currency markets, with sterling falling against the dollar, analysts said uncertainty ahead of Britain’s vote was one of several reasons why they expected stock markets to make little progress in the coming weeks.

“Our view is that risk/reward is not attractive for equities,” JP Morgan Cazenove wrote in a note.

Copyright Reuters, 2016

Courtesy : BRecorder



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