Miners lend support as rate-sensitive stocks drag Europe

* STOXX 600 index down 0.1, FTSE 100 gains 0.1 pct

* Miners lead, helped by upgrade

* Persimmon rises after update

* Pharma, utilities a weak spot
(Recasts, adds quote and detail, updates prices)

By Kit Rees

LONDON, July 5 (Reuters) – European shares edged lower on
Wednesday, weighed down by weak healthcare stocks and utilities,
although gains among basic resources stocks after an upgrade
helped cap losses.

The pan-European STOXX 600 index was down 0.1
percent by 0831 GMT in choppy trade, while the blue chip index
also fell 0.1 percent.

Miners rose 0.9 percent, hitting a two-month high
after Credit Suisse upgraded the sector to “overweight” in its
latest global equity strategy update, saying the sector was a
more rewarding play on higher oil prices, interest rates and

Glencore, which rose 2.2 percent, also supported
Britain’s commodity-heavy FTSE 100, with BHP Billiton
in tow as Chinese steel rebar futures rallied.

Among individual movers, British housebuilder Persimmon
jumped around 3 percent after it reported a 7 percent
rise in first-half sales, with the market unaffected by the UK’s
June general election.

“(There’s been) a fair bit of concern regarding the housing
sector, what the outlook might be like with the uncertainty
caused by the general election and the Brexit negotiations
ongoing,” Dafydd Davies, partner at Charles Hanover Investments,

“However, we do see further upside (to) the housebuilders
due to the current shortage of housing stock there is still in
the UK.”

Shares in Adidas were the biggest individual
gainers, rising 4.3 percent to the top of the STOXX after HSBC
said that the sporting goods firm was likely to increase its
outlook, upgrading it to “buy”.

“We believe the sales growth story and associated margin
expansion plan make this stock a very visible compounder,” HSBC
analysts said in a note.

Interest rate-sensitive utilities and health care
stocks were a weak spot, with pharmaceuticals dragged
down by GlaxoSmithKline, which fell after a downgrade
from Citigroup to “neutral” from “buy”, citing a slowdown in
market for HIV drugs if the Affordable Care Act (ACA) is

A rise in interest rates has been a focus for markets ever
since central banks hinted at a possible tightening in monetary
policy, with a rise in bond yields making high dividend-paying
stocks less attractive.
(Reporting by Kit Rees, Editing by Vikram Subhedar and Louise