Miners propel European shares to fresh 2-year high

LONDON Tue Jan 29, 2013 4:45pm GMT

LONDON Jan 29 (Reuters) - European equities scaled fresh two-year highs on Tuesday, boosted by miners, as optimism about economic recovery gained momentum following encouraging U.S. home price data and comments over growth in top metals consumer China.

A report earlier showed U.S. home prices rose in November, adding further to evidence of a housing market recovery there. China's top think tank, meanwhile, lifted its economic growth forecast for 2013 to 8.4 percent from 8.2 percent, with faster expansion seen in the first half of the year.

The FTSEurofirst 300 provisionally ended up 0.5 percent at 1,178.55, its highest close since Feb. 18, 2011, taking the rally off its June lows to around 24 percent. Mining stocks ended the day up 1.8 percent.

Fund managers said that while there was the possibility that equities would level off after such hefty gains, they deemed a significant near-term sell-off as unlikely.

"You will get to the point where that squeeze higher will have absorbed all of the cash that was destined to go into equities and it's at that point markets will be vulnerable - but I don't think we're there yet," said Andrew Cole, a fund manager at Baring Asset Management, which has 32.4 billion pounds ($50.9 billion) of assets under management.

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