Miners help European stocks keep winning run

European stocks rose yesterday for the sixth straight session, as rallying metal prices and hopes of big infrastructure spending boosted mining and steel shares such as ArcelorMittal. Utility group GDF Suez, which said Russian gas supplies to France plunged by 70 per cent yesterday amid a deepening price dispute between Russia and Ukraine, dropped five per cent.

The FTSEurofirst 300 index of top European shares ended 1.9 per cent higher at 889.57 points, its highest closing level since November 10.

"Bad news has already been priced in by the market, while good news hasn't. All the stimulus plans and aggressive interest rate cuts are just starting to have an impact on equities," said Marc Touati, chief economist at Global Equities, in Paris.

"The flow of gloomy macro data will continue for a while, but the US economy should start to feel the effect of the stimulus plan sometime in the spring or the summer, and investors are now trying to anticipate that," Mr Touati said.

ArcelorMittal surged 14 per cent, Rio Tinto soared 11 per cent, Xstrata rose 13 per cent and Vallourec added 10 per cent.

The DJ Stoxx basic resources index plummeted 65 per cent in 2008 - the most hit among all the DJ Stoxx industry indexes - as investors dumped cyclical stocks while the global economy tipped into a sharp downturn. But analysts said the sector could be one of the first to rebound in 2009, helped by all the infrastructure expenses announced by governments around the world to revive growth.

Volkswagen soared 12 per cent following news late on Monday that Porsche lifted its voting stake in the carmaker to a majority.

Volkswagen was also helped by its US December auto sales, which were largely better than its peers'.

Other carmakers were on the rise, with Daimler up 3.3 per cent. Renault, which said it has reached its year-end target of slashing rising stocks of unsold vehicles back to the levels it recorded at the end of 2007, gained 4.1 per cent.

Shares trimmed their gains in late trading after gloomy US manufacturing and housing data, but managed to remain in positive territory. The FTSEurofirst 300 has gained 10.7 per cent over the past six sessions, its longest winning streak since late October.Data showed yesterday new orders received by US factories sank a much-greater-than-expected 4.6 per cent in November, the fourth straight monthly decline and a sign the sharp drop in manufacturing is deepening the recession, a government report showed on Tuesday.