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Europe shares rally as miners soar; HSBC drops 1%

European equities enjoyed an ebullient Monday, buoyed by a positive trend set in Asia and a rebound in commodity prices.

Miners gain

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IBEX 35
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The pan-European Stoxx 600 index provisionally closed up 1.6 percent with all sectors in positive territory. This boost to market sentiment has followed a recovery in oil prices on Monday after steep losses in the previous session. It also comes amid some weak data on Monday morning with business activity in the euro zone hitting a 13-month low in February, according to the latest purchasing manager's index from Markit.

The largest gains were seen in the basic resources sector which traded 6.3 percent higher. Oil and gas stocks closed up 3 percent and technology stocks were up 1.4 percent.

Miners Anglo American, Glencore, Rio Tinto and BHP Billiton were among the best performers on the FTSE, trading 8 to 11 percent higher. Jefferies raised the target price of Anglo-American shares to 275 pence from 215 pence on Monday and each stock benefited by the rebound in commodities.

In the U.S., stocks traded more than 1 percent higher in midday trading. The Dow Jones industrial average and the broader S&P 500 traded within 10 percent of its 52-week intraday high, out of correction territory.

HSBC falls

Meanwhile, HSBC announced a 1 percent rise in pre-tax profit for 2015, as Europe's biggest bank by assets deals with volatile markets, ongoing cost-cutting efforts, and leadership uncertainties. Shares of HSBC closed down 1.2 percent mid-morning.

In other earnings news, Bovis Homes reported a 20 percent rise in full-year pre-tax profit to £160.1 million ($227.6 million). Its shares nonetheless closed down 4 percent.

On the German DAX index, shares of BMW were up 1.8 percent after the Handelsblatt newspaper reported that the carmaker planned to a launch a new 7-series model to compete with the Mercedes S-class.

Sterling drops

Despite the positive backdrop, sterling hit a seven-year low on Monday on rising concerns that Britain could leave the European Union with a referendum now set to be held in June.

On Sunday, influential politician and London Mayor Boris Johnson announced that he was supporting the "leave" campaign, dealing a blow to Prime Minister David Cameron's "stronger together" campaign.

Elsewhere, European equities got a boost from Asian markets which shrugged off a slow start early Monday to trade mostly higher, with major indexes in China, Japan and Australia all rising. Last week, most major indexes posted weekly gains, despite a weaker finish on Friday.