* FTSEurofirst 300 index gains 0.3 pct in choppy trade
* Mining shares feature among top gainers; track metals
* Retailers slip; Hennes & Mauritz down after results
By Atul Prakash
LONDON, Jan 27 (Reuters) - European shares rose on Thursday,
supported by stronger miners, though a cut in Japan's credit
rating by Standard & Poor's reminded investors about the high
debt situation in several peripheral European countries.
Mining shares topped the gainers list as key base metals
prices jumped on supply concerns and on hopes that global demand
for raw materials will rise. Investors hope that the U.S.
Federal Reserve's move to maintain a $600 billion bond-buying
plan will help an economic recovery.
The STOXX Europe 600 Basic Materials index <.SXPP> rose 1.6
percent, while Anglo American <AAL.L> gained 1.5 percent. At
1254 GMT, the FTSEurofirst 300 <> index of top shares
advanced 0.3 percent to 1,156.19 points after falling to a low
of 1,150.12 earlier in the session.
"Investors are a little bit nervous, but the bias is still
reasonably on the upside. The winners of the last year are more
or less being sold and people are pouring money into the ones
that did not perform so well in 2010," said Philippe Gijsels,
head of research at BNP Paribas Fortis Global Markets.
"But we still have many more challenges to face. There is a
possibility of new tensions in the euro zone and Japan reminds
us that many countries are reasonably indebted. I think we are
in a late stage of this rally and are not too far from some
correction."
Standard & Poor's cut Japan's long-term sovereign debt
rating for the first since 2002 saying the country's government
lacked a coherent plan to tackle its mounting debt.
Politicians and credit ratings agencies have been warning
for years that Japan needs to lower its public debt pile, by far
the worst among rich nations at double the size of its economy,
but progress has proved elusive.
Among the Group of Seven industrial countries, the United
States, Britain, Italy and France are all carrying large
deficits. A debt crisis in some euro zone countries prompted
equity investors to trade cautiously in the second half of 2010
and is still keeping the markets jittery.
"Investors are just range trading after a decent move
yesterday," said Giles Watts, head of equities at City Index.
RETAILERS SLIDE
Retailers were the top decliners, led lower by Swedish
budget fashion giant Hennes & Mauritz <HMb.ST>. Its shares fell
6.9 percent after it posted a surprise fall in pretax profit and
its gross margin fell more than expected. The European retail
sector index <.SXRP> fell 1.3 percent.
Drugmakers were broadly lower, with Novartis <NOVN.VX>
falling more than 2 percent after missing forecasts with a 10
percent drop in fourth quarter core earnings per share (EPS).
AstraZeneca <AZN.L>, however, rose 1.4 percent as it cheered
investors with above-forecast fourth quarter earnings and a
surprise promise to buy back $4 billion of shares.
Nokia <NOK1V.HE> fell 5 percent after the world's top
cellphone maker by volume reported its third profit fall in a
row and warned of a weak start to 2011. []
On the positive side, expectations of a global economic
recovery helped automakers. The STOXX Europe 600 Automobile and
Parts index <.SXAP> rose 0.6 percent, while BMW <BMWG.DE> was up
1.6 percent.
"Recent economic indicators from the U.S. have been broadly
positive, with even the housing market receiving a boost with
yesterday's new home sales data, and the bulls will be hoping
for more of the same ahead of tomorrow's key GDP figures," said
Anthony Grech, head of research at IG Index.
(Editing by Hans Peters)
