By David Brett
London - European stocks rose early on Wednesday, tracking gains overnight in Asia and approaching fresh 2012 highs, after comments from China's new leader boosted global growth expectations and fuelled a rally in commodity stocks.
By 0833 GMT, the FTSEurofirst 300 was up 4.94 points, at 0.4 percent at 1,126.19 with the year's closing high of 1,128.65 firmly in its sights.
Basic resource stocks and oils were good gainers after Chinese Communist Party chief Xi Jinping said the country will ensure stable economic growth, sparking a sharp rally in Chinese shares with the Shanghai Composite Index surging 2.9 percent.
The comments from China helped investors shrug aside the deadlock in US “fiscal cliff” negotiations of some $600 billion of tax hikes and federal spending cuts.
“There was positive news out of China ... The miners are rallying following stronger commodities and at least for now we head higher and can put the 'fiscal cliff' on the back burner for the time being,” Jawaid Asfar, trader at SecurEquity, said.
The FTSEurofirst 300 and the euro zone's blue chip index have rallied up between 5.5 and 7 percent since mid-November as sentiment among investors has improved surrounding the euro zone debt crisis and the United States' budget negotiations.
“There is a bit more confidence creeping back in ... Subject to any horrors creeping out of the woodwork in the banking sector and any failure of a bipartisan agreement in the US then we may well see a positive run up in to the year-end,” Justin Urquhart-Stewart, investment director at Seven Investment Management, said.
The Stoxx50e, currently at 2606.19, this week failed to pierce through a strong resistance level representing a peak in March. Crossing above the level, at 2,611 points, would send a strong bullish signal.
“The index should be able to break above its year high, there's no selling pressure at the moment and the sentiment that this is the start of a long-term rally is quite strong,” Aurel BGC chartist Gerard Sagnier said.
Away from the commodity stocks other riskier assets rallied too with banks gaining 0.8 percent led by heavyweight HSBC up 0.8 percent.
Europe's largest bank rose after a conglomerate controlled by Thailand's richest man, Dhanin Chearavanont, bought a minority stake in China's Ping An Insurance for $9.38 billion from the global bank.
There was relief among investors in Britain's Tesco, up 4 percent although still well below pre-profit warnings highs, after the world's No. 3 retailer, launched a strategic review of its loss-making United States chain Fresh & Easy that could lead to a sale or closure of the business.
“There is a lot of corporates in these markets that have been doing well and paying dividend but their share price has been suppressed (by the broader downbeat sentiment),” Urquhart-Stewart, said. - Reuters