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Europe: Shares end higher led by miners; Italian banks plunge
[LONDON] European shares rose on Tuesday at the end of a choppy session, helped by gains among mining companies, but Italy underperformed as its banks snapped a two-day winning streak.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX 50 index both rose around 0.6 per cent.
The Italian banking index fell 3.7 per cent, reversing initial gains as investors questioned the effectiveness of a state-orchestrated deal to create a fund to shore up weaker lenders.
"The problem with the Italian bank fund is that it is not big enough and it risks compromising the banks that are already in a much better shape," said Francois Savary, chief investment officer at investment and consultancy firm Prime Partners.
Intesa Sanpaolo and UniCredit, the country's two biggest banks, fell 5.2 and 4.2 per cent respectively, sending the Milan blue chip index down 1.6 per cent.
The two lenders are to contribute 1 billion euros each to the fund, according to a source cited by Reuters.
Luxury goods industry leader LVMH rose 1.5 per cent, reversing initial losses triggered by first-quarter sales below forecasts.
The mining sector index rose 3.2 per cent, making it the top sectoral gainer, supported by steady copper prices and encouraging economic signals from China.
The FTSEurofirst has fallen nearly 10 per cent since the start of 2016 as concerns about a China-led global economic slowdown weigh on world stock markets.
But strategists at HSBC kept an "overweight" position on continental European equities.
"We continue to argue that Europe offers the best earnings story globally, although it has been disappointing so far, with the market being hurt by global growth concerns. We see a robust business cycle, policy support, and investor under-ownership," they wrote in a note.