European shares hit 11-month high as miners, banks perform well

European shares closed higher yesterday, rising for the sixth consecutive day as miners and banks performed well and strong US macroeconomic data boosted hopes of a swift global recovery.

The pan-European FTSEurofirst 300 index of top shares ended 0.6 per cent higher at 993.91 points, its highest closing level in 11 months.

The index plummeted 45 per cent in 2008, but has gained nearly 20 per cent this year, soaring 54 per cent since falling to a record low in March. It remains down almost 15 per cent from its level in mid-September 2008 before the collapse of Lehman Brothers.

"At the moment, the story of a recovery is still intact," said Joerg Rahn, chief investment officer at wealth management company Marcard, Stein & Co.

"Macroeconomic data has been improving bit by bit and, although the current upturn is not endless, there is also no frothy feeling in the market."

Across Europe, Britain's FTSE 100 index was up 0.5 per cent, Germany's DAX index advanced 0.5 per cent, and France's CAC 40 rose 0.8 per cent. The DJ STOXX Basic Resources Index was the top sectoral gainer, up 2.4 per cent. Steelmakers rose, with Salzgitter up 5.3 per cent, ThyssenKrupp up 3.1 per cent and ArcelorMittal up 5.1 per cent.

Goldman Sachs raised price targets for the three firms in a sector note, keeping its respective buy, hold and conviction buy ratings.

Miners rose, with Rio Tinto, BHP Billiton, Anglo American up between 0.7 and 3 per cent.

"Stocks have still room on the upside. The economic recovery will be limited and gradual, but I don't think we will get a double dip, while interest rates will stay low for a long time. So the outlook for equities remains positive," said Jean-Claude Petit, head of equities at Barclays Wealth Managers France.

Macroeconomic data from the United States underscored the optimism.

The Reuters/University of Michigan Surveys of Consumers said the preliminary reading of consumer confidence for September rose to 70.2, the highest since June. This was above economists' median expectation of 67.3, according to a Reuters poll.

Shares in Henkel rose 2.9 per cent, as Morgan Stanley hiked its price target for the household goods company to €30.5 from €28, keeping its "overweight" stance.

On the downside, the DJ STOXX European Telcom Index dropped 0.1 per cent, with Vodafone, France Telecom and Deutsche Telekom down 0.1 to 0.6 per cent.