European shares closed higher after choppy trading on Monday with Chinese economic data buoying miners and eurozone banks reversing early weakness on progress towards a deal on the eurozone's debt crisis. London-listed base metals miners including Antofagasta, Kazakhmys and Rio Tinto led the move higher, all up over 7 percent, while the STOXX Europe 600 Basic Resources index rose 5.6 percent.
Boosting the sector, down heavily this year but on course to snap a 7-month losing run, was news the manufacturing sector in China, the world's biggest metals consumer, had expanded slightly in October after three months of contraction. The European equivalent, however, did little to help domestically focused cyclicals, falling again to heighten recession fears and underline the need for a debt-crisis deal at the second leg of a eurozone leaders' meeting on Wednesday.
By the close, the FTSEurofirst 300 index of leading European shares was up 1.1 percent at 988.99 points, after rallying strongly on Friday, ahead of the first leg of the politicians meet on Sunday. Volumes were low, however, at 72 percent of the 90-day average, as some, including many long-only funds, wait for clarity on the deal before increasing their "underweight" or "neutral" asset equity weighting, traders said. The final condition for a sustained recovery is the bottoming of leading indicators of the global output cycle, which seems to be taking shape, he said.
Bank holders of Greek debt have offered to take a 40 percent hit, although some politicians, particularly in Germany, want that figure to rise to more than 50 percent. As a result, Greek banks including National Bank of Greece, the biggest Greek lender and a large holder of the country's debt, led fallers. The stock fell 21 percent and was the most heavily traded at around twice its 90-day average. The heavy Greek falls meant the STOXX Europe 600 Euro Zone Banks index , up 1.2 percent, lagged its bigger relative , which includes Nordic, UK and Swiss banks and ended up 1.7 percent. On the flipside, UK lenders including Barclays, up 2.6 percent, were among the biggest gainers and Ian Gordon at Evolution Securities said he expects them to continue outperforming.