Europe close: Basic Resource shares pace gains

European equity markets powered ahead at the start of the week, with basic resources spearheading the advance as copper prices rallied on supply worries, while the European Commission raised it growth forecast for the Eurozone.

The benchmark Stoxx Europe 600 index was up 0.75% to 370.13, Germany’s DAX was 0.92% firmer at 11,774.43 and France’s CAC 40 rose 1.24% to 4,888.19.

Meanwhile, oil prices pushed lower, with West Texas Intermediate down 1.82% to $52.90 per barrel and Brent crude off 2.05% to $55.56 a barrel.

Gold on Comex fell 0.88% to $1,225.00 per troy ounce.

Basic resources racked up healthy gains, with the Stoxx 600 sub-index for the sector ending the day 2.69% higher atop the 453.33 mark as prices for the 'red metal' jumped to a 20-month high on the back of supply concerns after BHP Billiton declared a 'force majeure' due to a strike at its copper mine in Chile.

Elsewhere, the governor of France’s central bank François Villeroy de Galhau said the country’ debt costs could rise by €30bn a year if France ditches the euro, a warning shot aimed at presidential candidate Marine Le Pen who plans to take the country out of the Eurozone if elected.

In other corporate news, Stada surged 13% after the pharmaceutical company said over the weekend that it has received two offers for its acquisition, one of which is from private equity group Cinven Partners LLP.

Royal Bank of Scotland was up 2.49% on reports it was planning to cut more than £800m of annual operating costs by slashing jobs and closing branches.

Heineken was little changed after agreeing to buy beer and soft drinks maker Brasil Kirin Holding from Japan’s Kirin Holdings for €664m.

Software provider Fidessa erased 2.1% after it declared both a final and special dividend, with profits strongly boosted by the weak pound.

Lundin Petroleum was up 2.44% after it said it would spin off its non-Norwegian oil and gas assets into a separately-listed company.

Sanofi nudged up 0.29% as it agreed to sell a portfolio of five drugs in Europe to Ipsen for €83m to help pave the way for a takeover of certain assets from Germany's Boehringer Ingelheim.

Swedish defence company Saab fell 3.09% after it reported quarterly operating profit that missed analysts’ expectations.

Spreadex’s Connor Campbell said: “The Eurozone led the way this Monday, the DAX and CAC jumping 0.7% and 0.8% respectively following news that the European Commission had raised its growth forecasts for the region as a whole. For the next two years steady expansion is expected for all members of the EU, the first time the EC has been able to announce such a picture since 2008.”

The EC’s growth 2017 forecasts for the eurozone were revised higher to 1.6% from the previous 1.5%, with the 2018 forecast upped to 1.8% from 1.7% before.

Eurozone inflation is expected to climb to 1.7% in 2017, bumped up from a prior forecast of 1.4%, with the consumer price index projection for 2018 maintained at 1.4%. Unemployment in the single currency area was expected to fall to 9.6% in 2017, revised down from the previous 10%, with the 2018 number put at 9.1%.

In other data, German wholesale inflation rose to 4% in January year-on-year from 2.8% the previous month, its highest level since late 2011. Price inflation for Europe’s largest economy rose 1.9% last month, a three-year high, and producer prices increased to 1%, a high not seen since 2012.