Britain's FTSE Edges Higher As China Comments Lift Miners

by
Britain's FTSE rose in early deals on Tuesday, led by miners after reassurance from China's government that growth would not drop too far, although Tullow Oil weighed on the usually growth-sensitive energy sector.

* FTSE 100 0.04 percent higher

* Anglo up on stronger gold price, Kumba results

* Tullow slides after digging dry well

Britain's FTSE rose in early deals on Tuesday, led by miners after reassurance from China's government that growth would not drop too far, although Tullow Oil weighed on the usually growth-sensitive energy sector.

Miners gained 1.6 percent and accounted for the top eight FTSE 100 risers after the Chinese premier made a commitment to maintain growth above 7 percent, with China also planning to boost railway expansion.

"The miners are good for trading because they're volatile, they move on the back of economic news, especially with China," Thomas Robertson, sales trader at Accendo Markets, said.

"Now there's some official commentary that 7 percent is the benchmark, it's spurring a bit more confidence into the sector."

Anglo American was the top individual riser, up 2.3 percent, with gold continuing its recent strength partly on the back of buying from China, and after in-line results from Kumba which contributes 40 percent of Anglo's earnings.

Although strike action increased costs, Liberum said in a note that Kumba remained "most solid performing unit in Anglo at the moment," seeing the results as good for the stock price.

Basic materials, which are sensitive to optimism over the global economy, led the market higher, contributing 7.8 points to the FTSE 100 and bringing it into positive territory.

By 0707 GMT, the blue chip index was up 0.04 percent at 6,625.94, just 0.5 percent away from setting a new six-week high.

Energy-related stocks underperformed, weighed down by a 7.4 percent slump in Tullow Oil after it announced it had dug a dry well in French Guiana. Tullow saw 45 percent of its 90 day average volume traded in early deals.

"When you give an update and say those few words: 'a well is dry', then that just spooks everybody straight away... It was starting to recover from lows around 890, but now a bit of confidence has come out of the company," Robertson said.

Also dropping in decent volume was easyJet, down 4.5 percent and second top faller on the FTSE 100 after HSBC downgraded its recommendation on the low-cost airline to "neutral" from "overweight".

HSBC cuts its earnings estimates, saying Britain's hot summer could hit easyJet's profits. The stock saw 30 percent of its 90 day average traded by 0755 GMT, three times that of the broader index.

View Comments

Recommended For You