Finally some good news for mining shares

Overnight news has spurred our market higher this morning, with resources stocks amongst the biggest winners.

The European Central Bank (ECB) announced plans to start buying sovereign debt from struggling countries, enabling governments to keep their borrowing costs low, which should allow them time to restructure their economies. That jolted the European and US markets higher, with the UK’s FTSE 100 and the US S&P 500 indices both rising by more than 2%.

It also contributed to gold adding 0.7% to US$1,705 an ounce, and China iron ore added 30 cents to trade at US$87 a tonne. While the moves were small, the direction was more important.

As at 11.30 am, the S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) is up 0.5%, with many of the resources related companies recovering some of their losses. Fortescue Metals Group’s (ASX: FMG) shares rose by more than 5%, Boart Longyear Limited (ASX: BLY) was up 8.3% to $1.375, NRW Holdings (ASX: NWH) recovered 6.1% to $2.26 and Emeco Holdings Limited (ASX: EHL) gained 6% to 70.5 cents.

Of the top 10 movers on the ASX 200, all are resources or mining services companies.

Investors will be hoping the trend continues, with many nursing large losses over the last fortnight, as the iron ore price crashed, taking many stocks with it. Fear then appeared to enter the market, with some stocks heavily sold off. At one stage, Boart Longyear was trading on a prospective P/E ratio of just 3.

The news from the ECB suggests that China should avoid a protracted slowdown, and potentially propping up demand for Australia’s commodities in the short-term.

The Foolish bottom line

Whether the latest news from Europe is a real turning point, or yet another false dawn remains to be seen, but investors were enjoying a little good news this morning at least.

If you’re in the market for some high yielding ASX shares, look no further than our “Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

5 Companies we like better than

When ace stock picker Scott Phillips has a buy recommendation, history suggests it can pay to listen.

Scott recently revealed what he believes are the five best ASX stocks for investors to buy right now... and wasn't one of them! That's right -- he thinks these 5 stocks are even better buys.

Learn more

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.