European shares mark new highs as mining stocks rally

By Anisha Sircar and Ambar Warrick

(Reuters) -European stocks ended at a record high on Thursday after relief around property developer China Evergrande benefited China-focussed mining stocks, while a strong earnings season buoyed broader sentiment.

The pan-European STOXX 600 closed 0.3% higher at a new peak of 485.29 points, with the mining sector rallying 3.7% in its best day in four months.

Diversified miner Anglo American PLC was the best performer in the sector, jumping 5.9% after rival diamond producer, Russia's Alrosa, posted a profit jump and flagged a strong recovery in global diamond demand.

BHP Group rose 3.9% after it said it had won approval for its climate roadmap. The world's largest miner aims for net zero emissions by 2050.

Iron ore and copper prices surged following reports that China's debt-saddled Evergrande Group had once again averted a default. Higher commodity prices boosted the broader mining sector. [IRONORE/] [MET/L]

Still, concerns over rising global inflation acted as a cap, especially after a higher-than-expected reading from the United States.

"There's a great deal of concern about the rather insane hike in U.S. inflation – a 31-year-high isn't something to be sniffed at," said AJ Bell analyst Danni Hewson.

"It's hard to see that markets think this would be the peak of inflation when you consider external influences, particularly supply bottlenecks and increased commodity prices, as the cost of living goes higher."

U.S. data followed elevated producer prices from China, while euro zone money markets also began pricing in an earlier-than-signalled interest rate hike by the European Central Bank.

Profits of STOXX 600 companies are expected to jump 60.7% in the third quarter to 104.4 billion euros ($120.7 billion) from a year earlier, latest Refinitiv data showed, an improvement from last week's 57.2% estimate.

Goldman Sachs raised the 12-month price target for the benchmark STOXX 600 to 530 points from 520 points, saying European earnings have proven resilient to supply chain snags.

Among other stocks, Luxembourg-based ArcelorMittal gained 4.1% after reporting its strongest quarter in more than a decade.

Swiss chemical company Sika jumped 10.9% to an all-time-high after agreeing to buy construction chemicals maker MBCC in a $6 billion deal.

European retail property firms Klepierre, Britain's Shaftesbury and Capital & Counties rose after J.P.Morgan upgraded the stocks, stating the worst of COVID-19 was "behind us".

However, retail stocks were among the biggest drags overall, led by British discount retailer B&M, which dropped 5.6% after posting lower first-half core earnings.

(Reporting by Anisha Sircar in Bengaluru; Editing by Anil D'Silva and Shinjini Ganguli and Kirsten Donovan)