* FTSEurofirst 300 index up 0.3 percent
* Mining index tops gains
* Glencore surges after plans to cut debt
* German industrial output rises in July (Updates prices)
By Atul Prakash
LONDON, Sept 7 (Reuters) - European shares gained on Monday, with basic resources stocks leading the market higher after mining and commodities trading company Glencore announced plans to cut debt and trim its African copper operations.
The pan-European FTSEurofirst 300 index was up 0.3 percent at 1,397.29 points by 1355 GMT after rising to a high of 1,409.64 points in early trading. The index closed 2.5 percent lower on Friday when a mixed jobs report fuelled uncertainty about the timing of a likely U.S. rate hike.
Glencore shares rose 7.3 percent after the company said it will sell assets, raise $2.5 billion in a new share issue and suspend dividends, in an effort to cut its debt by a third to $20 billion by the end of next year.
“Concerns regarding the group’s balance sheet have weighed heavily on the share price in recent weeks. Whilst uncertainties regarding prospects for China and its impact on the mining sector remain, Glencore management appear to be taking firm action to try and remove the company from the eye of the storm,” Keith Bowman, equity analyst at Hargreaves Lansdown, said.
The company has been under pressure to cut debt as prices for its key products, copper and coal, have sunk to more than six-year lows on concerns about China’s economic growth. Even with Monday’s bounce, its shares are still down more than 50 percent this year after hitting record lows last week.
Shares in pure-play copper miners rallied after Glencore said it will suspend production at two of its mines, taking 400,000 tonnes of copper supply out of the market.
Copper producer Antofagasta surged 7.3 percent, helping the STOXX Europe 600 Basic Resources Index to gain 1.4 percent and topping the sectoral gainers’ list.
“Bargain-hunting traders and investors might well be eyeing up some very reasonably priced stocks that have been the victims of recent China-inspired volatility,” said Augustin Eden, an analyst at Accendo Markets.
“While the fact remains that commodities are still under immense pressure and those who dig them up are too, blue-chip stocks trading at a discount like Glencore’s provide an ideal vehicle for riding price swings.”
Analysts said European equities remained vulnerable to further declines because of lingering concern about the pace of economic growth in China, the world’s top metals consumer.
China’s stock market reopened after closing over Thursday and Friday as Beijing celebrated 70 years since the end of World War Two. Shanghai shares initially rose as much as 1.8 percent following remarks over the weekend by regulators aimed at calming the market, but the index was last down 1.6 percent.
China’s policymakers and regulators tried to soothe jittery markets, promising deeper financial market reforms and stressing the economy was showing signs of stabilising.
Trading volumes in Europe were likely to be thin with U.S. markets closed on Monday for a public holiday. By 1357 GMT, volumes on the FTSEurofirst 300 index were just 28 percent of its 90-day daily average.
Across Europe, Britain’s FTSE 100, France‘c CAC and Italy’s FTSE MIB rose 0.3 to 0.4 percent. Germany’s DAX was up 0.5 percent, also helped by data showing German industrial output rose in July at its fastest pace this year. (Editing by Larry King)