Strength in heavyweight mining stocks helped Britain's top share index edge higher on Thursday, countering slippage by banks on eurozone debt concerns. At the close, the FTSE 100 was up 10.9 points, or 0.2 percent at 5,880.99, well below a morning spike above the psychologically important 5,900 level to 5,910.77.
"The overall impression is that traders are highly anxious about the sovereign debt situation and, given that there is no quick fix for this situation, this anxiety could persist throughout the summer, thereby keeping equities in check for an extended period," said Charles Stanley technical analyst Bill Macnamara.
Miners provided the main prop for the FTSE 100 as investors returned to the sector on hopes of a reverse of the flow of funds "largely out of mining and other stocks" in the recent IPO of commodities trader Glencore. "We believe that mining equities are now set to make good gains as index money replaces speculative capital in Glencore and as short positions used to help fund the IPO are unwound," Fairfax analysts said in a note.
Antofagasta was a top blue chip gainer, up 3.5 percent, as the Chilean copper miner posted a 30 percent rise in quarterly core earnings, helped by higher prices.
Tobacco stocks were also in demand, led by a 1.3 percent rise in British American Tobacco which agreed to buy privately owned Productora Tabacalera de Colombia, the second largest cigarette company in Colombia, for $452 million. "While small in the context of BAT's overall portfolio, and unlikely to have a material impact on EPS, this transaction shows there are still tuck-under acquisitions available for BAT to deploy its substantial cash flow," said RBS in a note.
Banks were the worst blue chip performers, with part-nationalised Royal Bank of Scotland shedding 1.1 percent and global heavyweight HSBC down 0.4 percent as worries over eurozone sovereign debt failed to dissipate. Concerns about Greek fiscal woes were re-ignited after Eurogroup President Jean-Claude Juncker said if payment of the IMF tranche to Greece in June was not possible, the Europeans were expected by the IMF to step in.
Lloyds Banking Group, however, bucked the weaker sector trend, up 1.1 percent as Virgin Money stepped up its bid interest in 600 retail branches, which the British bank has been ordered to sell by regulators. By London's close, US blue chips were down 0.4 percent on the renewed eurozone worries and as the US economy grew at a slower-than-expected pace in the first-quarter, with GDP unrevised at up 1.8 percent.
Engineer Weir Group was the top FTSE 100 gainer, up 5.3 percent as RBS raised its target price to 2,125 pence from 1,935 pence to reflect the firm's recent bullish interim management statement. Burberry was the biggest blue chip faller, down 4.6 percent, retreating after a strong recent run following full-year results.
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