Mining sector gains help to lift European indices

Eurostoxx 50: 2,294.24 (+7.33) Frankfurt DAX: 5,917.08 (–6.19) Paris CAC: 3,176.19 (+51.00)EUROPEAN STOCKS climbed from a two-year low yesterday, snapping a seven-day slump in the benchmark Stoxx Europe 600, amid speculation the Federal Reserve will act to restore confidence in the markets.

Basic resource stocks rebounded from an 11-day slide.

The Stoxx 600 advanced 1.4 per cent in London having earlier tumbled 5.1 per cent.

The Fed will “hint that we’ll get help for the economy”, James Bevan, London-based chief investment officer at CCLA Investments said. “If I look at the fundamental free cash flows that many companies are giving, there is outstanding value.”

Fed policy makers are holding a one-day meeting as last week’s Standard and Poor’s downgrade of the US credit rating fuels concern about the world’s largest economy.

Speculation has grown that the Fed will initiate a third round of emergency stimulus measures to prop up growth.

A report yesterday showed China’s inflation accelerated to the fastest pace in three years in July, limiting the scope for monetary easing as risks to the global economy mount.

Antofagasta, a copper producer controlled by Chile’s Luksic family, rose 6.1 per cent to 1,205p, ending seven days of losses.

Xstrata, the largest exporter of power-station coal, added 7.4 per cent to 1,042p. Rio Tinto, the second-biggest mining company, increased 4.7 per cent to 3,548p.

Thomas Cook surged 17 per cent to 53.35p, rebounding from Monday’s 16 per cent drop.

Meyer Burger Technology, the biggest producer of solar-panel manufacturing equipment, rose 15 per cent to 26.85 Swiss francs, snapping an 11-day losing streak in which the stock slid 30 per cent.

BMW led gains in the Euro Stoxx 50 Index, advancing 6.3 per cent to €58.63.

RWE tumbled 6.3 per cent to €28.75, the lowest since 2003. The company said first-half profit dropped after cutting full-year earnings targets on Monday because of the costs of phasing out nuclear power stations.

Larger rival EON lost 5.9 per cent to €15.53.

Yara International, the world’s biggest publicly traded nitrogen-fertiliser maker, slipped 3.7 per cent to 243.40 kroner. – (Bloomberg)