European shares rise; oils, miners shine

European shares advanced early on yesterday, with gains virtually across the board, after US stocks climbed overnight and Asian markets followed suit, with the focus on US economic data due later in the session.

At 0845 GMT, the FTSEurofirst 300 index of top European shares was up 1.1 per cent at 869.31 points. It closed 1.2 per cent lower last Thursday, having fallen as much as two per cent earlier in the session.

"We trade in a narrow range, up and down, without any clear direction," said Heinz-Gerd Sonnenschein, equity strategist at Postbank in Bonn, Germany.

The European benchmark index lost 45 per cent in 2008 and fell further early this year, hitting a lifetime low on March 9. It rose 36 per cent between that day and May 7, and has remained rangebound between about 823 and 878 points since then.

"We have lost the triggers from the company side... on the company side it is quiet," Mr Sonnenschein said, referring to the end of the first-quarter corporate earnings season.

"It's a mood of wait and see. There are no drivers to push the markets down but there's also no strong news to push the markets up."

LandesBank Berlin pinpointed 2,500-2,600 points as a key area for the DJ EuroSTOXX 50, which was up one per cent at 2,478.05 points.

"If it were able to jump over that hurdle, the charts would improve clearly, boding for a new technical upward potential," LBB said.

Energy stocks drew strength from a rise in the price of crude oil to above $65.5 a barrel, putting the "black gold" on track for its largest monthly percentage gain in more than a decade.

Total rose 1.9 per cent, ENI advanced 0.8 per cent and BP put on 0.6 per cent.

Japanese factory output rose 5.2 per cent in April, the biggest monthly gain since 1953, and sharply higher than the median market forecast for a 3.2 per cent rise.

Manufacturers surveyed by Japan's Ministry of Economy, Trade and Industry expected their output to jump 8.8 per cent in May and a further 2.7 per cent in June.

The data fuelled a rally in copper prices, which rose to a three-week high. Gold prices hit a three-month high. Mining shares rallied as a result. BHP Billiton was up 3.4 per cent, Xtrata added 4.5 per cent, Anglo American gained 2.6 per cent and Randgold advanced 5.3 per cent.

Among steelmakers, ArcelorMittal rose 2.7 per cent and Salzgitter traded 3.4 per cent higher.

Banks reversed Thursday losses, with UBS adding 2.9 per cent, BNP Paribas up 2.4 per cent, Société Générale rising 2.3 per cent and Barclays 1.7 per cent higher.

Insurers were also in the black on the DJ Stoxx index after a series of sector rating and price target upgrades by Goldman Sachs.