European shares rise as firmer miners offset Brexit, HSBC concerns

MILAN: European stocks rose on Monday as firmer mining company shares helped to offset concerns about Britain's potential exit from the European Union and a fall in HSBC's shares.

The pan-European FTSEurofirst 300 index gained 1.4 percent by the middle of the trading session, though it is still down nearly 10 percent since the start of 2016 due to concerns about a global economic slowdown.

Britain's FTSE 100 was up 1.2 percent, while Germany's DAX gained 1.9 percent and France's CAC rose 1.7 percent.

Mining stocks were among the best performers, with Anglo American rising 7.3 percent, as the price of copper reached a two-week high.

Metals prices were boosted after an uptick in China's steel industry sparked hope for a revival in metals demand, given China's role as the world's biggest consumer of metals.

Shares in Telecom Italia also advanced after Vivendi increased its stake in Telecom Italia to 22.8 percent, strengthening its position as the top shareholder.

However, shares in HSBC fell 2.9 percent after Europe's biggest bank reported a surprise pre-tax loss of $858 million and predicted a 'bumpier' financial environment ahead.

Analysts also cited uncertainty over the outcome of Britain's referendum on whether to leave the European Union - dubbed "Brexit" - as being partly responsible for the FTSE gaining less than the DAX and CAC. The vote is set for June 23.

Currency traders hit sterling, homing in on narrowing bookmaker odds on a Brexit.

The scale of the reaction on sterling, an almost 2 percent fall driven chiefly by the decision of London Mayor Boris Johnson to join the "out" camp on Sunday, also sent British government bond prices spiralling lower.

"A Brexit would be worse for the UK than for Europe," said Andrea Williams, European equities fund manager at Royal London Asset Management.

However, analysts at Societe Generale said any decision by Britain to leave would be just as harmful for the rest of the EU as it would be for Britain.

"Our own view falls in the very negative camp, with an estimated loss of 0.5-1.0 percentage points per annum to the UK and 0.125-0.25 percentage points for the euro area over a decade. Given that potential growth is estimated at only 1.2 percentage points, a Brexit would be a significant shock to the euro area economy!" SocGen wrote in a note.