European mining stocks soar as metals rally, earnings reassure

(Bloomberg) — European basic resources stocks surged the most in more than twenty months, led by metal and mining companies, as commodities rallied and several companies published reassuring results and guidance.

The Stoxx 600 basic resources index rose as much as 4.7 percent, the most intraday since November 2016, and is testing several key levels after breaking out from a downtrend that started in June. Metals stocks have suffered over the past two months on fears that escalating trade tensions would impact Chinese growth and curb demand from the world’s biggest importer. China earlier unveiled a package of targeted policies to aid growth.

The sector was buoyed on Tuesday as base and ferrous metals rallied, with aluminum gaining as orders to withdraw metal from the LME spiked. All metals climbed, pushing index heavyweights Rio Tinto Group, BHP Billiton Ltd. and Glencore Plc all at least 4.5 percent higher as of 12:52 p.m. in London. The three miners account for more than 50 percent of the index’s weighting.

Steel stocks also rose after Outokumpu Oyj reassured investors about U.S. tariffs and EU safeguard measures, while Norsk Hydro ASA climbed as a global shortage of aluminum outweighed second-quarter earnings which missed estimates. Paper company UPM-Kymmene Oyj was the top performer in the index after giving guidance for a significant improvement in earnings in the second half of the year.

(By Michael Msika)