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UPDATE 1-Miners drive strong European share gains as investors await GDP figures

Published 16/08/2017, 06:35 pm
© Reuters.  UPDATE 1-Miners drive strong European share gains as investors await GDP figures
BARC
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EZJ
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STLAM
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LHAG
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BALF
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RIO
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AAL
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BHPB
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ADML
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EXOR
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GLEN
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EKTABs
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ICAs
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AB1
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STOXX
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STX50EEX
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SXEP
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SXPP
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* STOXX 600 up 0.8 pct, blue chips up 0.9 pct

* Euro zone GDP expected to cement investor optimism

* European Q2 earnings growth tracking 15 pct - TR

* Fiat Chrysler, Exor jump again on M&A speculation

* EasyJet, Lufthansa fly higher in Air Berlin fallout (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets)

By Helen Reid

LONDON, Aug 16 (Reuters) - Miners and oil stocks helped Europe's major share index make robust gains on Wednesday as higher metals prices lent a hand and investors awaited euro zone GDP figures expected to confirm the bloc's economic growth was on track.

The pan-European STOXX 600 .STOXX rose 0.7 percent, its third day of gains after a sharp sell-off last week. Euro zone stocks and blue chips .STOXX50E jumped 0.8 percent.

Basic resource stocks .SXPP were the top boost, jumping 1.8 percent after London zinc hit a decade high, lifted by Chinese construction spending. American AAL.L , Rio Tinto RIO.L , Glencore GLEN.L and BHP Billiton BLT.L all rose 2.2 to 2.3 percent, cementing strong benchmark gains. Oil stocks .SXEP also jumped as crude prices edged up. focus was on euro zone GDP figures expected at 0900 GMT, with analysts forecasting 0.6 percent quarter-on-quarter GDP growth, or 2.4 percent annualised.

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 (LON:BARC)' 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," he added.

Earnings drove some strong moves, while M&A speculation boosted Fiat Chrysler FCHA.MI and Exor EXOR.MI , the investment fund which owns the carmaker, again.

Fiat and Exor jumped 4.2 and 2.6 percent, extending gains from Monday when a media report said a Chinese company may be interested in the carmaker. Lufthansa LHAG.DE and Easyjet EZJ.L lifted 1.4 to 2.5 percent again, continuing Tuesday's strong rally as they emerged as likely buyers of Air Berlin's AB1.DE assets when the German airline filed for insolvency.

Swedish healthcare firm Elekta EKTAb.ST gained 2 percent 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 c. 13 percent short interest in the stock," JP Morgan analysts said.

"Consensus momentum could swing in the next six to 12 months," they added.

Meanwhile second-quarter profit disappointment weighed on Swedish food retailer ICA ICAA.ST , down 5 percent. builder Balfour Beatty BALF.L jumped 5.8 percent, leading construction stocks higher, after first-half profits were boosted by a rebound in construction in Britain. insurer Admiral ADML.L dropped 8.4 percent after its profits rose just 1 percent in the first half. results season was drawing to a close, with earnings expected to grow 15 percent from the second quarter last year, or 12.8 percent 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.

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