By Kit Rees
LONDON, Aug 22 : A flurry of results for heavyweight mining stocks and a dramatic plunge in Provident Financial’s shares injected some energy into European shares on Tuesday, with the region’s benchmark set to break a three-day losing streak in a typically sleepy month for market activity.
The pan-European STOXX 600 rose 0.5 percent, having fallen close to a five-month low in the previous session, while euro zone blue chips also gained 0.5 percent.
Britain’s FTSE 100 was up 0.7 percent, as was Germany’s DAX.
Europe’s basic resources sector enjoyed a second session of gains and was the top-gaining sector, supported by a rally in iron ore prices.
Well-received results from miners BHP Billiton and Antofagasta also boosted the sector, rising 3.2 percent and 5 percent respectively.
Jasper Lawler, senior market analyst at London Capital Group, said that it was a positive that the mining firms were able to wind down some of their debt and move into a period of more sustainable profitability.
“We’re in a period of divergence between oil and metals,” Lawler added.
UK subprime lender Provident Financial shed more than 63 percent after it issued its second profit warning in two months, cancelled its dividend and said that its chief executive was leaving.
“Overall, this is without doubt a disaster for a company and management team which, up until recent times, we regarded extremely highly,” analysts at Shore Capital Markets said in a note, suspending their previous ‘buy’ recommendation on the stock.
Shares in Provident Financial were already down around 40 percent for the year ahead of the profit warning, which took year to date losses down to nearly 78 percent.
On the positive side, UK housebuilder Persimmon was among the top gainers, up 2.6 percent after it posted a 30 percent rise in first-half profit.
The European earnings season is drawing to a close, with 87 percent of MSCI Europe firms having given updates for the second quarter.
Of these firms, more than 60 percent have either met or beaten analysts’ expectations, according to Thomson Reuters data, with earnings growth for the quarter clocking in at around 24 percent compared with the same period last year.
Aside from earnings, shares in Fiat Chrysler extended gains for a second day, up 1 percent after China’s Great Wall Motor Co Ltd confirmed its interest in the Italian-American automaker.