European shares edge up

European shares edged up on Tuesday as investors braced for the next round of the European Central Bank's (ECB) injection of cheap cash for banks, a major factor in driving the market's rally in 2012. Strategists said equities will benefit further from the funding move, and that European stocks exposed to the US economy may gain. The Dow Jones rose above 13,000 again after upbeat US consumer confidence data.
"I don't think the market will be disappointed with the LTROs (Long Term Refinancing Operation). I think it can still progress from here. And some stocks quite exposed to the US economy still look cheap," said Colin McLean, managing director at SVM Asset Management in Edinburgh. Europe's banks were expected to take in another half trillion euros in three-year loans offered by the ECB on Wednesday in a bid to inject liquidity into the fragile banking system.
The FTSEurofirst 300 index of top European shares rose 0.2 percent to close at 1,076.12 points and is up 7.5 percent in 2012. Volume was low, at 82.5 percent of the index's 90-day average. Miners were among the gainers, as copper prices rallied to a more than two-week high on Tuesday. The prospect of LTROs, providing stimulus, and the euro remaining close to a three-month high against the US dollar, boosted metals prices. The STOXX Europe 600 Basic Resources Index rose 0.9 percent.
Other cyclical sectors to gain included autos, up 0.7 percent, and more than 30 percent higher so far in 2012. Euro zone banks edged up 0.2 percent. "With such a major market event scheduled for tomorrow it's hardly surprising we've gone sideways today and if it wasn't for the good US consumer confidence numbers, we would have been blaming the uncertainty for a bigger decline," said Angus Campbell, Head of Sales, Capital Spreads.
Charts also pointed to more gains. The euro zone's blue chip Euro STOXX 50 index, up 0.3 percent at 2,519.72 points, was at the verge of a bullish technical signal known as a golden cross, with its 50-day moving average about to break above its 200-day average.
"The golden cross is used as a 'buy' trigger by a lot of automatic trading programmes," a Paris-based trader said. Deutsche Bank's fund flows data showed US investors were more upbeat on European equities than Europeans themselves. Funds domiciled in Europe have seen outflows from western European equity of 0.8 percent year to date, while US-domiciled funds (invested in European equities) have received inflows of 7.1 percent.
Among individual shares, STMicroelectronics rose 6.9 percent after the group's mobile joint venture with Ericsson, ST-Ericsson, won a contract from handset maker Samsung. British housebuilder Persimmon soared 12.7 percent, after the firm unveiled plans to return 1.9 billion pounds ($3.01 billion) of surplus cash to shareholders, and posted profit ahead of forecasts. Energy companies fell as crude prices eased further after the strong run that took them to record highs in euro terms. The STOXX Europe 600 Oil & Gas Index fell 0.2 percent.