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European shares finish flat around one-year peak

European STOXX 600

The pan-European STOXX 600 finished flat after climbing 1.3% to its highest level since February 2020

European shares finished flat around a one-year peak on Tuesday as a boost from major mining and bank stocks was hit by losses in most of the other sectors, as investors remained uncertain over a euro zone economic recovery.

The pan-European STOXX 600 finished flat after climbing 1.3% in the previous session to its highest level since February 2020.

The European mining index climbed to a near 10-year high following a 2% rise in shares of Glencore, while higher iron ore and base metal prices supported the sector.

The world’s largest miner by market capitalization, BHP Group, rose 1.5% after posting its best first-half profit in seven years and declaring a record interim dividend.

Commodity prices have benefited recently on expectations of more fiscal stimulus and Covid vaccinations.

Energy stocks advanced 0.5% helped by stronger oil prices.

Bank stocks hit more-than 11-month high as investors bought into sectors severely hit by the pandemic.

Shares of PKO Bank Polski topped the STOXX 600 on upbeat expectations over a long-running foreign currency mortgage issue.

Euro zone economic output contracted by less than expected during Q4 2020, data showed.

German investor sentiment was high over consumption pick up, even as inflation expectations were seen cooling.

The weakness in economic activity will continue to weigh on output in the current quarter as restrictions curtail mobility and businesses postpone reopening, analysts at TS Lombard wrote in a note. Growth will bounce back strongly in H2 on the back of pent-up demand and an easing of restrictions, although the vigour in economic activity could be less than before.

Analysts hiked their Q1 profit growth forecast for European listed companies from the 41% to 42.7%, according to Refinitiv data, on growing expectations of an economic recovery this year.

But Q4 earnings are now expected to have fallen 19.9% compared with the 18.2% drop seen last week.

Global equities have remained in demand as U.S. President Biden negotiates a $1.9 trillion fiscal stimulus.

In Europe, finance ministers agreed on Monday to continue supportive measures for the economy.

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