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Europe: Miners lift shares on metals prices, euro zone growth

[LONDON] Miners and oil stocks led Europe's major share indexes higher on Wednesday on the back of higher metals prices and improved euro zone GDP figures.

The pan-European STOXX 600 ended the session 0.7 per cent higher, its third day of gains after a sharp sell-off last week. Euro zone stocks and blue chips also jumped 0.7 per cent.

Basic resource stocks provided the top boost, gaining 2.5 per cent after London zinc hit a decade high, lifted by Chinese construction spending.

Glencore, Boliden, Anglo American and Outokumpu rose by between 3.4 and 4.2 per cent, while oil stocks edged up 0.7 per cent.

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Euro zone GDP expanded by 0.6 per cent quarter-on-quarter and the annual growth figure was upgraded to 2.2 per cent from the earlier estimated 2.1 per cent.

Stronger economic growth is part of the reason global active funds remain overwhelmingly positive on European equities, the biggest consensus overweight position according to Barclays' analysis of investor flows.

"The market mindset is that Europe is recovering from a very deep, very long recession that hit at its financial core," said Christopher Peel, chief investment officer at Tavistock Wealth. "The banking system is finally starting to show signs of having worked through the legacy of 2008-2009," Mr Peel added.

Earnings drove some strong moves, with British builder Balfour Beatty jumping 6.4 per cent, leading construction stocks higher, after first-half profits were boosted by a rebound in construction in Britain.

By contrast, a second-quarter profit disappointment weighed on Swedish food retailer ICA, down 6.5 per cent, while Danish healthcare product maker Coloplast dropped more than 6.2 per cent after its third-quarter organic growth fell short.

Car insurer Admiral fell 6 per cent after profits rose just 1 per cent in the first half.

Second-quarter results season was drawing to a close, with earnings expected to grow 15 per cent from the second quarter last year, or 12.8 per cent excluding the energy sector, Thomson Reuters data showed.

"Earnings and earnings expectations are rising as you're getting a global recovery," said Tavistock's Peel.

M&A speculation again boosted Fiat Chrysler and Exor, the investment fund which owns the carmaker.

Fiat and Exor jumped 2.6 and 2.1 per cent respectively, extending gains from Monday when a media report said a Chinese company may be interested in the carmaker.

Swedish healthcare firm Elekta gained 2.6 per cent after JP Morgan upgraded it to "overweight". "We believe the potential of (radiation therapy) Unity has not been fully captured by the market; this is reflected in the (approximate) ... 13 per cent short interest in the stock," JP Morgan analysts said. "Consensus momentum could swing in the next six to 12 months."

REUTERS