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Miners bolster European shares, Provident Financial plummets

BHP Billiton, Antofagasta results boost miners.

LONDON – A flurry of results for heavyweight mining stocks and a plunge in Provident Financial shares injected some energy into European shares on Tuesday, with the region’s benchmark indexes ending a three-day losing streak.

The pan-European STOXX 600 rose 0.8%, having fallen close to a five-month low in the previous session, while euro zone blue chips gained 0.9%, also supported by a weaker euro.

Italian blue chips fell 0.1%, lagging the broader market as fresh political worries put pressure on the country’s government bonds.

Europe’s basic resources sector enjoyed a second session of gains and was the top-gaining sector, up 1.7%, supported by a rally in iron ore prices.

Well-received results from miners BHP Billiton and Antofagasta also boosted the sector, rising 2.1% and 2% respectively.

Jasper Lawler, senior market analyst at London Capital Group, said it was positive that the mining firms were able to wind down some of their debt and move into a period of more sustainable profitability.

UK subprime lender Provident Financial shed 66% after it issued its second profit warning in two months, canceled its dividend and said that its chief executive was leaving.

“Overall, this is without doubt a disaster for a company and management team which, up until recent times, we regarded extremely highly,” analysts at Shore Capital Markets said in a note, suspending their “buy” recommendation.

Shares in Provident Financial were already down around 40% for the year ahead of the profit warning, which took year to date losses to nearly 80%.

On the positive side, UK housebuilder Persimmon rose 1.8% after it posted a 30% rise in first-half profit.

A rally in Fiat Chrysler stalled after Chinese automaker Great Wall Motor affirmed its interest in the Italian-American automaker but said it had not held talks. Fiat shares touched a 19-year high before ending up 0.3%.

The European corporate earnings season is drawing to a close, with 87% of MSCI Europe firms having given updates for the second quarter.

Of these firms, more than 60% have either met or beaten analysts’ expectations, according to Thomson Reuters data, with earnings growth for the quarter clocking in at around 24% compared with the same period last year.

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