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* Mining stocks began outperforming late 2016
* Fundamentals stronger for mining versus oil - analysts
* European oil vs mining, monthly returns http://reut.rs/2jGqkBV
* BP, Statoil shares hit by earnings disappointment
By Vikram Subhedar and Barbara Lewis
LONDON/CAPE TOWN, Feb 7 (Reuters) - Mining stocks areoutpacing oil-related peers in a "reflation rally" sparked byU.S. President Donald Trump's election and the outperformancewill last for at least another year if history is a guide.
Investors have flocked to sectors closely geared to theglobal economic cycle and the shift gained momentum in Novemberafter Trump's victory inspired expectations for boosts tomanufacturing, infrastructure spending, and global growth.
While both energy and mining stocks rose, the latter chargedhigher in the second half of the year led by bellwethers such asAnglo American and Glencore, in stark contrastto a dismal 2015. Since October last year, the mining sector haseasily outperformed the energy stocks on monthly returns.
"Our UK PMs (portfolio managers) hold miners in preferenceto oil majors based on prospects for better dividend growth andearnings revisions, which are the key fundamental drivers on atwo to three year horizon," Frances Hudson, global thematicstrategist at Standard Life Investments, said.
Since 1980, there have been four spells when European miningstocks made bigger gains than energy majors, such as BP and Shell and each lasted at least a year. Thatsuggests the current outperformance that began late in 2016 hasmonths to run.
GRAPHIC: European oil vs mining, monthly returns http://reut.rs/2jGqkBV
The last mining surge was in 2010 when big gains in metalsprices pushed investors towards mining stocks, while the shalerevolution in the United States took off, flooding oil and gasmarkets and weakening the oil price.
Results from BP and Statoil on Tuesday showed therisks to stock prices from disappointing results. Both companiesreported underwhelming earnings sending their shares down about2 percent.
Goldman Sachs said in a note to clients that oil-relatedshares were coming off their strongest 12-month performancerelative to the physical price of crude since at leastthe 1980s, leaving limited room for further gains.
For miners, the fundamentals look more bullish as supplystarts to be constrained following cuts in exploration budgetslinked to the commodity price downturn of 2015.
"There have been dramatic changes to fundamentals. Supplygrowth has basically stopped. Copper is the key," ChrisLaFemina, managing director at Jefferies, said of mining, addingthere was still plenty of scope for gains even after last year'srecovery.
Basic materials stocks are easily the bestperforming sector this year, up more than 6 percent. The broaderSTOXX 600 is up 1 percent while oil and gas isone of just three sub-sectors in the red.
At a mining conference in Cape Town, the first majorindustry event of the year, insiders were more upbeat comparedwith last year but mindful of risks given the sector's historyof boom and bust.
Tom Albanese, chief executive of diversified miner Vedanta, said that while the mining sector had recovered pricesremained modest compared with where they were before the 2015crash.
"I would not say these are peak prices. I see a progressionof supply-tightening events," Albanese said.
(Editing by)
