European shares drift higher; banks, energy gain

European shares drift higher; banks, energy gain

London: European equities edged higher in choppy trading on Friday, with positive financial and energy stocks outpacing weaker mining shares, which came under pressure on concerns about global demand for metals.

At 2:09pm, the FTSEurofirst 300 index of top European shares was up 0.2% at 946.66 points after hitting an intraday low of 941.64. The index, which slumped 45% in 2008, is still up 13% this year and has jumped 46 percent since a record low in March.

Banks were among top gainers, with Standard Chartered, HSBC , Lloyds, Royal Bank of Scotland and BNP Paribas rising 0.3-1.1%.

“We have had a rally of around 50% so profit taking is quite normal. But overall market sentiment is positive and momentum is good. Just keep an eye on China," said Koen De Leus, economist at KBC Securities.

“The most decisive thing now is the Chinese stock market. And as long as the Chinese market holds up, the risky assets will hold as well," he added.

China has been a big worry for investors, registering large losses that have seen the Shanghai Composite Index swing wildly and even drop into bear market territory, 20% below its recent peak.

But the index gained 4.5% on Thursday for its second largest gain this year and rose 1.7% on Friday.

Energy shares were generally higher, with BP, Royal Dutch Shell, Repsol, Total and StatoilHydro gaining 0.1-0.8%.

But miners came under pressure after BHP Billiton, the world’s largest miner, said it did not expect to see “clean demand" for the global metals sector until early 2010 as a global slowdown bites.

BHP Billiton fell 0.7%, while Antofagasta, Rio Tinto and Eurasian Natural Resources fell 0.1-0.5%.

Automakers were also lower after the US Transportation Department said on Thursday the popular “cash-for-clunkers" programme that gives rebates for new car buyers trading in less fuel-efficient vehicles will end on Monday.

BMW, Peugeot, Renault and Fiat were down 0.1-1.1%.

Investors ignored losses posted by the world’s biggest container shipping group A P Moller-Maersk, sending its shares about 5% higher. Maersk made a deeper-than-expected first-half loss as freight rates, volumes and oil prices fell, but its CEO did see some improvement in the world economy that would work its way through to the company’s results.

Swiss drugs industry supplier Lonza fell 5.3%. It bid $3.55 per share for Canadian rival Patheon, offering a potential windfall to majority shareholder JLL, which bid just $2.00 per share for the firm last December.

In economic news, French private sector activity expanded for the first time in 15 months in August, a survey of purchasing managers showed on Friday, in a hopeful sign for third-quarter economic growth.

Across Europe, Britain’s FTSE 100 index, Germany’s DAX and France’s CAC 40 rose 0.2-0.3%.