London: European shares rose for a sixth straight session to a 26-month high on Monday as upbeat US and Chinese data boosted investors’ risk appetite, and on hopes that Beijing may not raise interest rates anytime soon.
By 2:30pm, the FTSEurofirst 300 index of top European shares was up 0.4% at 1,130.23 points after rising up to 1,131.12, the highest since September 2008. The index, which rose in the last two weeks, is up 8% so far this year.
“Market sentiment is bullish because of strong economic data and some positive policy announcements in the United States in the past weeks,” Koen De Leus, strategist at KBC Securities, said, referring to a plan announced by the US administration this month to extend all Bush-era tax cuts for two years.
“But I don’t think there are too many investors willing to take big risks in the remaining days of the year. It could mean that people are going to secure their profits. The market could become pretty volatile in the coming days due to lower volumes.”
The Thomson Reuters/University of Michigan’s consumer sentiment index showed on Friday a better-than-expected rise in December.
Miners topped the gainers’ list as copper hit a record high following weekend data, which showed China’s industrial output in November beat expectations.
The STOXX Europe 600 basic resources index rising 1.2%. Anglo American rose 1.5%, while Antofagasta was up 1%.
China raised the minimum amount of money lenders must keep in reserve for a third time in a month. Beijing, however, held back from lifting interest rates, a relief for some but a move many still expect will happen at some stage.
“The relentless demand for copper and the strong move in its price is having a telling effect on stocks this morning. But overall volumes are low and are likely to remain muted for the month as many investors await the New Year to deploy funds,” said Manoj Ladwa, senior trader at ETX Capital.
Volumes on the FTSEurofirst 300 were 4% of its 90-day daily average.
Recent gains in European shares improved technical outlook, with the Euro STOXX 50, the euro zone’s blue-chip index, rising 0.3% to 2,848.12 points.
The index moved further away from its 50-day moving average and a 61.8% Fibonacci retracement of a fall from a high in April to a low in May.
Automakers also featured among the top gainers on hopes that an economic recovery would boost demand for vehicles. The STOXX Europe 600 Automobiles & Parts index rose 1%, Peugeot gained 1.9%, while Renault rose 2.8%.
Among individual movers, British oilfield services company Wellstream Holdings rose 5% after General Electric said it would buy the company for about 800 million pounds ($1.3 billion).
Credit Suisse was up 0.2%. The Financial Times said the company may issue up to $30 billion in contingent-capital bonds over the next several years to help shore up its finances ahead of the start of new bank rules.
Across Europe, Britain’s FTSE 100, Germany’s DAX, France’s CAC 40, Ireland’s ISEQ, Spain’s IBEX, Portugal’s PSI 20 and Italy’s FTSE MIB rose 0.1 to 1.1%.