Coal mining shares up on Massey upgrade, outlook

NEW YORK (Reuters) - Shares in U.S. coal companies rose on Monday, led by a 6 percent surge in Massey Energy (MEE.N: Quote, Profile, Research), which has forecast a significant increase in the price of coal used in steelmaking.

Credit Suisse meanwhile raised Massey's stock target price to $50 from $44 and Caris raised Massey's investment rating to buy from above average.

Massey shares were up $2.97, or 6.3 percent, at $50.12 in afternoon trading on the New York Stock Exchange. Arch Coal (ACI.N: Quote, Profile, Research) rose 4.8 percent to $51.30, Peabody Energy (BTU.N: Quote, Profile, Research) was 3.5 percent higher at $59.05 and Consol Energy (CNX.N: Quote, Profile, Research) rose 2 percent to $77.66.

The Dow Jones coal index .DJUSCL was 3.6 percent higher.

Massey said on Friday it expects prices for metallurgical coal used in steelmaking to be significantly higher than previously forecast and it was raising spending to take advantage of the opportunity.

World demand for metallurgical or coking coal is soaring right now, driven by China's appetite for steel for its industrial growth. The price has further increased because supply has been constrained as a result of recent floods in Australia affecting exports to Asia.

(Reporting by Steve James, editing by Mark Porter)