October 18, 2016 / 8:52 AM / 2 years ago

Commodities shares lead European equities higher, Burberry slumps

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* STOXX Europe 600 index up 1.2 pct

* Commodities-related stocks in demand

* Burberry slumps after update

By Atul Prakash

LONDON, Oct 18 (Reuters) - European shares bounced back on Tuesday, with commodities-related stocks leading the market higher after the prices of major metals and crude oil rose on a softer dollar.

The pan-European STOXX 600 index was up 1.2 percent by 0831 GMT after closing 0.7 percent lower in the previous session. However, the benchmark index is still down nearly 7 percent so far this year.

The market was helped by a rally of 2.4 percent in the STOXX Europe 600 Basic Resources index, the top sector gainer, as copper rose after the dollar eased from seven-month highs. Other metals, including gold, also rose as a weaker dollar made commodities cheaper for other currency holders.

The European oil and gas index also increased 1.5 percent on the currency moves and comments from some analysts markets might not be quite as over-supplied as thought.

“The market has been trading in a sideways range for a couple of months now. However, depressed stocks and sectors have seen some rebound, with commodities stocks falling in that segment,” said Gerhard Schwarz, head of equity strategy at Baader Bank in Munich.

Rio Tinto, Randgold Resources, Fresnillo , Polymetal, Royal Dutch Shell, Tullow Oil and BP rose 2.1 to 3.3 percent.

Danish jeweller Pandora rose 5.7 percent, the top gainer in the STOXX 600 index, with traders citing a bullish survey from Swedish broker Carnegie.

On the downside, Burberry fell 7 percent, even after the British luxury fashion label reported a better-than-expected rise in second-quarter retail sales.

Traders said the stock was hit by some negative broker notes. The group’s total sales also fell 4 percent on an underlying basis in the six months to end-Sept, hit by a fall in wholesale and licensing revenues.

“FX benefits aside, Burberry struggles to drive meaningful growth,” Liberum analysts said in note, adding that its valuation was at a premium.

Before Tuesday’s fall, Burberry shares had jumped nearly 50 percent since June.

French testing, inspection and certification company Bureau Veritas fell 4.5 percent after the company cut its outlook for full year 2016 as the weakness in the oil and & gas and shipping markets weighed on its revenue. (Editing by Andrew Heavens)

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