Banks and miners advance; Mediaset upgraded at Citigroup
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares rose to 14-month highs on Wednesday, with banks and miners performing strongly, amid further signs that the economic backdrop is improving.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP 252.52, +1.37, +0.55%) rose 0.5% to 252.46, just off an intra-day high of 252.95.
Wednesday's advance took the index over its 2009 closing high of 251.34 hit on Nov. 16 and back to levels not seen since October 2008.
The index also built on a 2% gain made in the first two sessions of the week as traders count down to the Christmas break.
It's now up 27.3% this year, although banks and miners have surpassed that performance, with the mining sector up 94.4% and the banking sector up 47% since the start of 2009.
On Wednesday, Rio Tinto (UK:RIO 3,285, +69.00, +2.15%) (RTP 207.80, +3.63, +1.78%) shares rose 2.1% and Xstrata (UK:XTA 1,059, +16.50, +1.58%) shares rose 1.6% in the mining sector, while Barclays (UK:BARC 277.40, +4.95, +1.82%) (BCS 17.71, -0.02, -0.11%) rose 1.8% and Julius Baer (CH:BAER 35.31, +1.19, +3.49%) climbed 1.4% in the banking sector.
On the regional-stock-market level, the U.K. FTSE 100 index (UK:UKX 5,373, +44.34, +0.83%) rose 0.8% to 5,373.18, the German DAX index (DX:DAX 5,970, +24.38, +0.41%) climbed 0.4% to 5,970.71 and the French CAC-40 index (FR:PX1 3,926, +27.13, +0.70%) advanced 0.7% to 3,924.03.
Asian shares were mostly higher on Wednesday and U.S. stock futures were pointing to mild gains ahead of new U.S. home-sales data.
Stocks hit 14-month highs on Tuesday on Wall Street, helped by surprisingly strong existing home-sales data.
The British Bankers' Association said Wednesday that U.K. mortgage lending continued to hold up in November, with seasonally adjusted net mortgage lending increasing 3.3 billion pounds ($5.3 billion) compared to a 3.2 billion pound increase in the previous month.
Even as data improve, central banks continue to prop up the global economy and minutes out Wednesday from the latest monthly meeting of the Bank of England's Monetary Policy Committee showed unanimous agreement on bond purchases and rate levels. Read more on Bank of England decisions.
"The Bank of England is clearly keeping all its options open in order to protect the recovery process," said Philip Gillett, trader at IG Index.
Still, Gillett said he's cautious about reading too much into this week's market gains -- even though stocks are near multi-month highs -- due to low volumes and a lack of key economic data.
European corporate news was also thin on the ground in the run up to the holidays although Maurel et Prom (FR:MAU 12.52, +0.48, +3.94%) rose 4.1% in Paris after saying it has hit oil in Gabon.
Mediaset (IT:MS 5.84, +0.12, +2.10%) shares rose 1.7% after it was upgraded to hold from sell at Citigroup.
The broker said short-term tailwinds are stronger than structural headwinds, with Mediaset likely to benefit from cost control, revenue and cost synergies in Spain, as well as a favorable Italian political environment.
Shares of Spanish television firms Telecinco (ES:TL5 9.80, +0.45, +4.81%) , up 0.8%, and Antena3 (ES:A3TV 7.75, +0.16, +2.11%) , up 2.1%, rose after both firms were upgraded to hold from underperform by Jefferies International.
"The likely consolidation of the Spanish TV market from four into two players will deliver over the medium-term earnings upgrades from pricing power, cost savings and optimization of programming across the commercial channels," the broker said.
Volkswagen (DE:VOW3 63.90, -1.95, -2.96%) preferred shares were down 2.5% on the first day of trading in the DAX index for the stock.
