European stocks gain on US earnings and seeming progress on debt ceiling

<p>European stocks gained for a second successive day, led once again by gains in the miners and banks as President Obama indicated progress is being […]</p>

European stocks gained for a second successive day, led once again by gains in the miners and banks as President Obama indicated progress is being made with agreements with the Republicans over deficit cuts and the subsequent raising of the US debt ceiling. Stellar earnings from Apple last night also brightened sentiment today, with tech stocks seeing a strong sector bounce as a result.

It is the miners and banks that are leading today’s index charge in a repeat of yesterday’s session.

Banks have had another stellar session, with the sector rallying some 2.3% on the day to post the best day of gains for the sector since the end of June. Barclays, Lloyds Banking Group and RBS have all seen strong price rallies of around 6% and 7% in the last two days, which is a strong bounce. It is a little too early to tell whether the last two days of gains is indicative of a change of sentiment however from the bearish theme of the last few weeks. Certainly the rather bullish earnings seen in the US has helped to convince traders to add risk to their portfolios this week, whilst seeming positive steps in the US to raise the debt ceiling and a calmer european bond market has helped give investors a bit more confidence.

However, we need to see the FTSE 100 consolidate back within its 250-point trading range between the 5860 and 6105 levels before we can be convinced that near term bearish sentiment may have changed. A close back above the 5860 level for the FTSE where resistance lies will help to put weight behind these two strong days of gains.

The mining sector has rallied by 1.8% in early trade before losing a little ground to trade 0.8% higher into the close, with BHP Billton leading the sector higher after reporting a 14% jump in iron ore output and telling investors that the firm’s recovery is well on track from the devastating weather experienced in Australia earlier this year. Coal output also came in better than forecasts, giving investors optimism that the miner can capitalise on growing coal demand. BHP Billiton’s share price rose 2.4% on the day after a successful session earlier this morning in Australia. Rio Tinto and Antofagasta closely followed BHP’s gains, both also rallying 2% on the day.

Apple’s stellar earnings last night have given a strong rise to technology shares across Europe. The maker of iPhones and iPads saw revenues more than double for the quarter to $7.31 billion. Shares in technology stocks rose on the back of Apple’s earnings, including that of ARMHoldings, which rose 4% to top the FTSE leader board in the morning session. Apples’ better-than-expected earnings follow a similar outperforming theme to that of IBM and traders will undoubtedly have heightened expectations for Intel, who reports later today too.

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