Rio Tinto, Fresnillo lead basic-resource gains

Eurostoxx 50: 2,988.97 (+21.19) Frankfurt DAX: 7,161.32 (+33.97) Paris CAC: 4,059.57 (+10.50)EUROPEAN STOCKS rose for a second day yesterday after the Federal Reserve maintained its stimulus plans, offsetting Standard and Poor's downgrade of Japan's sovereign credit rating.

“Markets were very happy the Fed announced it will keep buying Treasuries,” said Michael Koehler, head of strategy at Landesbank Baden-Wuerttemberg in Mainz.

“Japan’s downgrade confirms once again that we haven’t solved the sovereign-debt issue.”

France’s president Nicolas Sarkozy said yesterday that France and Germany would defend the euro at all costs and were warning investors not to bet against Europe’s single currency. “[German chancellor Angela] Merkel and I will never let the euro down, never,” Mr Sarkozy said in a speech at the World Economic Forum in Davos, Switzerland.

“The euro is not just a monetary question for us, it is a question of identity” that helped maintain peace in Europe.

The Stoxx Europe 600 Index has rallied 2.8 per cent this year amid better-than-forecast economic reports and speculation that European leaders will increase their efforts to contain the region’s sovereign-debt crisis.

European basic-resource shares were among the best performers yesterday. Fresnillo surged 2.1 per cent to 1,358p. Rio Tinto, the third-largest mining company, rose 1.3 per cent to 4,455p. Aluminium, copper, lead, nickel and tin all climbed on the London Metal Exchange.

Petropavlovsk gained 6 per cent to 1,094p. The producer of gold in Russia forecast output would rise 18 per cent in 2011 after the company missed estimates last year.

MB Software increased 7 per cent to €111.10 after Germany’s second-largest maker of business software said net income climbed to €64.7 million from €48.1 million a year earlier.

Mitchells and Butlers, the UK owner of Harvester and Toby Carvery pubs and restaurants, jumped 4.9 per cent to 359.6p.

Nokia Oyj sank 2 per cent to €7.65 after the world’s biggest maker of mobile phones said fourth-quarter net income fell to €745 million from €948 million a year earlier. The company lowered its outlook for the first quarter, underscoring the challenge of chief executive Stephen Elop in the fight against Apple’s iPhone and Google’s Android. – (Bloomberg)