Mining rally helps push European shares to eight-month high

Lenders stumble after Deutsche Bank cuts ratings on Lloyds and RBS in Britain

European shares edged to an eight-month peak on Monday, aided by Swiss software maker Temenos and a rally in mining stocks.

However, lenders suffered after Deutsche Bank cut its rating on British institutions Lloyds and RBS.


Bank of Ireland was one of the worst performers on what dealers said was a quiet day. The lender tumbled 4.37 per cent to close at 19.7 cent, following its sector across Europe. Investors sold close to 33 million of its shares in Dublin yesterday.


Hotel group Dalata fell 2 per cent €4.30 ahead of publishing its results for the first half of this year on Tuesday. More than 360,000 of its stock changed hands.

Another company due to report on Tuesday, service station operator Applegreen, gained 2.15 per cent to close at €4.75. However, dealers said volumes were light, with just 16,000 of its shares traded.

Newspaper group INM's €3 million acquisition of Celtic Media had little impact on its stock, which added 0.73 per cent to end the day at 13.9 cent. About 460,000 of its shares traded, which dealers described as weak.

Amongst the market's bigger players, insulation and building materials specialist, Kingspan, dipped 0.88 per cent to €24.78.


The blue-chip FTSE 100 index was down 0.2 per cent at 6,879.42 points by the close, retreating from a 2.2 percent rise on Friday that pushed it up to a two-week high.

RBS was the biggest faller on the FTSE 100, falling 3.5 per cent, with Lloyds down 2.1 per cent, after Deutsche Bank downgraded RBS to "sell" from "hold" and cut Lloyds to "hold" from "buy".

Deutsche Bank said RBS would be hit by the negative interest rate environment engulfing the broader banking sector, since rock-bottom rates can hit banks’ profitability, while Lloyds could be impacted by customers’ re-mortgaging.

Shares in Royal Dutch Shell increased 1 percent, while BP was up 0.8 per cent. A 1.5-1.9 per cent rise in BHP Billiton, Anglo American, Antofagasta and Rio Tinto following a recovery in metals prices helped the overall European mining index to rise 1.7 per cent.


Telecom company SFR gained 6.1 per cent after rival French telecoms group Altice said it planned to simplify its ownership structure by exchanging its shares for the outstanding 22.25 per cent of shares of SFR it does not already own.

Altice rose 1.1 percent, with Bryan Garnier saying that it retained its "buy" recommendation on Altice as the move was likely to have a positive impact on the company's earnings per share next year. The pan-European STOXX 600 index was up 0.3 per cent in early morning trading after setting its highest level since early January and building on a 2 per cent rise in the previous session, when weaker-than-expected US jobs data led investors to pare back bets on an imminent US interest rate rise.

Shares in retailer Metro jumped after the it announced that it would proceed with plans to split its wholesale and food business from its consumer electronics and expected both new units to achieve investment grade status without requiring a capital increase. But they later erased gains and were down 0.8 per cent at €27.75 by the afternoon. The STOXX Europe 600 Retail index was down 0.1 per cent.

Mike van Dulken, head of research at Accendo Markets, said the market tracked stronger Asian equities as investors interpreting Friday’s US Jobs data as being inconclusive and insufficient to convince the Fed that a rate hike was warranted this month.

Monday’s gains were clouded by a survey showing euro zone business growth was at its weakest since the start of last year in August, suggesting the bloc’s already struggling economy is losing what little momentum it had.

Among sectoral movers, the European oil and gas index rose 1.1 per cent as oil prices reversed losses after the dollar lost its momentum.

US markets were closed for Labour Day.

– (Additional reporting: Bloomberg, Reuters)

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas