European shares steadied on Wednesday after rising in the previous two sessions, with basic resources companies underpinning the broader market following a rise in metals prices.
The pan-European STOXX 600 index was trading flat in percentage terms. However, Britain’s commodity-heavy FTSE 100 index climbed 0.7 per cent.
The European basic resources index rose 1.4 per cent to its highest level since mid-2015 after base and precious metals prices advanced. Shares in
“Longer term, the ‘New Trump’ reality of higher growth through fiscal stimulus and infrastructure work certainly warrants higher commodities and stock prices,” said Philippe Gijsels, head of research at BNP Paribas Fortis.
“However, in the short run, miners, just like the overall market, are clearly ahead of themselves and a small period of consolidation would be healthy for the sector.”
The European mining sector has surged more than 12 per cent this month alone, taking total gains for this year to 60 per cent, on growing expectations that US President-elect Donald Trump’s pledge to invest heavily in infrastructure projects would boost the demand for raw materials.
However, Italian banks were on the back foot, with the sector index down 2.2 per cent on lingering concerns that the outcome of a referendum vote on constitutional reforms on December 4 could topple Matteo Renzi’s reformist government.
The European banking index was down 0.6 per cent, with shares in Banco Popolare, B P Milano and Unicredit falling 2.8 to 5.0 per cent.
Investors’ focus will be on Britain’s autumn budget update, due at 1230 GMT. Sectors such as housing, utilities, energy and airlines could react in the event of any sector-specific announcements by Finance Minister Philip Hammond.
Elsewhere, British travel company Thomas Cook rose more than 7 per cent after saying it was on track to grow in its current financial year after seeing an encouraging start to bookings for next summer and as it benefits from a turnaround plan for its German airline Condor.