Europe close: Stocks rise as mining sector jumps on Glencore-Rio merger talks

European stocks hit a record high on Friday, with miners lifted by a potential mega-merger of giants Rio Tinto and Glencore.

The pan-regional Stoxx 600 index closed up 1% at 609.67, while Germany’s DAX rose 0.5% to 25,261.64 and France’s CAC 40 ended up 1.4% at 8,362.09.

Glencore ended the session nearly 10% higher after it and Rio Tinto confirmed they were in preliminary talks about a possible combination of some or all of their businesses, which could include an all-share merger - a deal that would create the world's largest mining company valued at $207bn.

The Stoxx 600 basic resources index closed 2% higher at 697.45.

"Details are thin on the ground, but a … full combination would create a global leader in multiple industrial metals including iron ore and transition metals such as copper, cobalt and lithium," said Hargreaves Lansdown analyst Derren Nathan.

"But M&A isn’t an automatic path to extracting value for investors, with Rio’s Australian shares down 6% and Glencore ending Thursday in negative territory. Under the UK’s takeover code, the management teams now have until 5th February to outline a compelling case for both sets of shareholders."

Investors were also mulling the latest US non-farm payrolls report from the Bureau of Labor Statistics, which showed the economy added fewer than expected jobs in December, though the jobless rate still fell more than predicted.

Non-farm payrolls rose by 50,000 last month, less than the 60,000 additions expected by analysts. December's figures were lower than a 56,000 gain in November, which was revised down from the initial estimate of 64,000.

December's data was the first jobs report unaffected by October's record government shutdown, which distorted figures and delayed dozens of federal statistical releases.

Despite an increase in payrolls, job gains in November were still around 900,000 lower than they were a year earlier, the Labor Department said, with both hiring and layoffs at relatively low levels.

Nevertheless, the unemployment rate reduced to 4.4% in December, the BLS said, down from a four-year high of 4.6% the month before which was blamed largely on the shutdown. At the same time, however, the labour force participation rate fell to 62.4% from 62.5%.

Axel Rudolph, senior technical analyst at IG, said: "On the data front US non-farm payrolls growth slowed more than expected as the unemployment rate dipped to 4.4% while month-on-month average hourly earnings rose slightly. Meanwhile US housing start fell to a 5-year low. This mixed data still left markets expecting the Fed to hold rates, but attention now shifts to earnings season."

Oil prices surged as tensions rose within Iran with protests mounting against the Islamic regime, which shut off internet access to stifle the spread of information.

In other equity news, Sainsbury’s was in focus after saying it remained on track to deliver annual retail profits of more than £1bn, following strong demand for food and drink in the run up to Christmas.

The supermarket saw grocery sales jump 5.1% in the six weeks to 3 January, and by 5.4% over the third quarter. However, shares in the blue chip slumped after weak consumer confidence spending weighed on sales elsewhere in the group.

Tecan Group shot higher after the Swiss lab automation company confirmed 2025 profit targets and a rise in orders.