LONDON (Reuters) – European stocks faltered at the start of the trading year on Tuesday as an impressive run-up in metals and mining stocks reversed, while strength in oil companies and banks was not enough to stop the slide.
The pan-European STOXX 600 index dipped 0.2 percent in early deals, while euro zone stocks .STOXXE fell 0.3 percent.
Basic resources stocks weighed the most, with the sector index .SXPP down 0.6 percent. Rio Tinto (RIO.L), BASF (BASFn.DE) and BHP Billiton (BLT.L) all fell.
The mining sector had surged to a five-year high at the end of last week, riding a wave of rising copper and other base metal prices, but Tuesday’s dip suggested investors were taking profits after a strong run.
Oil, which marked its highest start to the trading year since 2014, supported benchmarks with oil majors across the region rising in concert with crude. Statoil (STL.OL) and Total (TOTF.PA) were among the strongest gainers.
Financials also rose with Santander (SAN.MC) and Unicredit (CRDI.MI) among top banking stocks.
In other eye-catching moves, Lufthansa (LHAG.DE) slipped 6.3 percent after British Airways owner IAG (ICAG.L) agreed to buy Air Berlin’s insolvent Austrian airline Niki.
The German carrier had backed out of a deal to buy Niki’s assets in mid-December due to competition concerns.
Germany-listed shares in South African retailer Steinhoff (SNHG.DE) surged 12 percent to the top of the STOXX, despite the firm saying its 2015 results would also have to be restated. The company also said its internal review of accounting irregularities was progressing.
Broker moves also drove trading: an upgrade to “buy” from Sydbank sent Vestas Wind (VWS.CO) up 2.7 percent after the company secured several new orders.
Europe’s mining sector at five-year high: reut.rs/2CaVart
Reporting by Helen Reid; editing by Tom Pfeiffer