Miners, drugmakers push European shares higher

Firmer commodity prices lifted mining and oil shares yesterday and helped European equities to a higher close, with investors waiting for a slew of heavyweight company results this week for near-term direction.

The FTSEurofirst 300 index of top European shares finished up 0.8 per cent at 1,060.53 points. The index, which rose 26 per cent last year, has jumped 64 per cent since hitting a record low in March 2009.

Miners topped the gainers' list, with copper up 1.5 per cent, supported by a fall in inventory levels. Aluminium, nickel and zinc rose 0.2 to 1.3 per cent, while platinum and palladium hit 17-month highs.

BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources rose 0.9 to 3.9 per cent.

Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 rose 0.6-0.7 per cent.

Investors awaited quarterly results from more US companies this week, including Bank of America, Citigroup, Morgan Stanley , Goldman Sachs, IBM, General Electric and Google.

"The rally that we have seen has not fully run its course yet," said Klaus Wiener, head of research at Generali Investments.

"I think that the earnings season on balance should be a good one. Companies have really built up operational leverage. This, together with ongoing policy support and hence sound macro-economic data, should lead the way for corporate assets."

Governments across the world have spent trillions of dollars to stimulate the global economy, which faced the worst financial crisis since the Great Depression of the 1930s.

European Central Bank Governing Council member Ewald Nowotny said the euro will not fall back into recession, but added that the ECB may, at some point, want to copy Fed plans to squeeze excess cash out of the banking system.

Trading was subdued as US markets were closed for Martin Luther King Day. Volumes at the European index were 70 per cent of its 90-day daily average volume.

Energy shares tracked crude, which rose 0.5 per cent, snapping a five-day losing streak as the dollar eased. Royal Dutch Shell, BG Group, Tullow Oil, Repsol and Total added 0.1 to 2.2 per cent.

Drugmakers were also in demand. AstraZeneca, GlaxoSmithKline, Novartis, Novo Nordisk and Shire rose 0.1 to 1.9 per cent.

Banks were higher ahead of earnings news from US peers. Standard Chartered, Barclays, Lloyds and Royal Bank of Scotland rose 0.6-3.2 per cent.

Greek banks, however, slipped on worries the EU may ask for additional measures to correct the country's fiscal woes. Alpha Bank, Euroabnk and National Bank fell 0.1 to 7.7 per cent.

Cadbury rose 1.8 per cent in anticipation of a higher bid from Kraft Foods, while one major shareholder, Standard Life, said Kraft needed to bid over 900 pence to get its support.

"Cadbury still manages to hold some interest for traders, with Kraft having just one more day to increase its takeover bid," said David Jones, chief market strategist at IG Index.

"Slight gains were seen for Cadbury but some traders seem to feel that this has dragged on long enough, making any sort of deal unlikely," he added.

International Power fell 3.4 per cent after jumping earlier as it said it was no longer in talk with France's GDF Suez regarding a combination of their assets.

International Power earlier rose as much as 9.8 per cent , hitting a 15-month high, boosted by a Sunday Times report that GDF Suez may make a takeover bid for the British company, while the Financial Times said the two companies had held discussions about creating a partnership involving foreign assets.