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European stocks grind out fresh highs as miners rally

May 11, 2021 00:00:00


European stocks inched to new highs on Monday as optimism about the reopening of economies and easy monetary policy lifted sectors that typically benefit from a recovery, reports Reuters.

The pan-European STOXX 600 index rose 0.1 per cent to hit a fresh all-time high, with miners rallying 2.6 per cent to a 10-year-high on the back of strong commodity prices.

UK-listed miners such as Rio Tinto, BHP Group and Glencore rose almost 3 per cent. China's benchmark iron ore futures surged 10 per cent to a record high, steel prices rose 6 per cent and copper prices touched record highs on hopes for improved demand amid tightening supply.

"The boom in commodity prices is good news for the materials or the cyclical sectors," said Rupert Thompson, chief investment officer at Kingswood Group in London.

"It cements the idea that you've got further rotation towards value and commodity sectors. But on the other hand, you've got the clear risk that it does exacerbate worries about inflation."

Investors will be focussing on US inflation data later this week to gauge if a strong rise in prices will drive the Federal Reserve to change its policy stance. A far weaker-than-expected US jobs data on Friday boosted hopes that interest rates will remain lower for longer.

UK's commodity-heavy FTSE 100 rose 0.2 per cent despite a surge in the pound, with British Prime Minister Boris Johnson set to announce the next phase of reopening from the COVID-19 lockdown.

British Airways-owner IAG, easyJet and Wizz Air, however, fell between 2 per cent and 3 per cent after UK allowed international travel to resume from May 17, but just 12 countries made the so-called "green list".

The wider travel and leisure sector declined 1.3 per cent, with highly valued technology stocks dropping 1.0 per cent.


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