Miners boost European shares

European shares hit a two-week high on Tuesday, with companies such as Taylor Wimpey and Vodafone gaining after their encouraging updates.

London - European shares hit a two-week high on Tuesday, with companies such as Taylor Wimpey and Vodafone gaining after their encouraging updates and miners tracking a rally in major industrial metals.

The pan-European FTSEurofirst 300 was up 1 percent at 1,328.96 points by 08h14 GMT after rising to 1,331.51, the highest since early May. However, the index, which closed flat in the previous session, is still down 7.5 percent this year.

Miners were the top sectoral gainers, with the STOXX Europe 600 Basic Resources index rising 2.4 percent following a rise in major base metals such as copper and aluminium. Shares in Anglo American, Glencore and BHP Billiton were up 3.7 to 5.9 percent.

“Markets are once again up on higher commodity prices. Nevertheless, we should not get carried away and chase the commodity complex higher as most of these markets are still very much over-supplied,” Philippe Gijsels, head of research at BNP Paribas Fortis, said.

“I expect quite a bit of volatility over the summer period.”

Financial stocks were also in demand. European banks rose 1.5 percent, while Greek banks advanced 3.4 percent, with UBS turning more positive on the Greek banking sector arguing that signs of progress in talks with Greece's lenders meant the sector could rebound.

“The starting point is very challenging and risks abound, but we see a fundamental investment case and valuations suggest upside potential,” UBS analysts said, referring to Greek banks.

Some companies were helped by their positive updates. Taylor Wimpey advanced 6.2 percent after the housebuilder announced a new special payout, promising investors about 1.3 billion pounds ($2 billion) over three years, underpinned by strong demand for property in the UK.

Vodafone was up 2.5 percent after the world's second-largest mobile phone operator said its earnings growth would accelerate this year. The group said a programme to improve its networks had boosted demand in Europe and helped it to return to underlying growth in 2016 revenue and core earnings for the first time since 2008.

“Demand for data continues to grow strongly... and Vodafone have invested heavily in infrastructure to capitalise on this,” Steve Clayton, head of equity research at Hargreaves Lansdown, said.

Among mid-caps, Lookers, one of Britain's biggest car dealership firms, rose 6.4 percent after saying that it had a good start to the year with positive results in the first quarter.

REUTERS