Britain's benchmark share index closed higher on Wednesday as gains in heavyweight gold-mining companies enabled the market to outperform rival European bourses, which fell on persistent worries over the Greek and Spanish debt crises. The bluechip FTSE 100 index ended up 10.07 points, or 0.2 percent, at 5,483.81 points.
However, trading volumes remained relatively thin - coming in at around 90 percent of the average 90-day FTSE volume - as worries over Spain's debt-ridden banks and Greece's future in the euro zone caused many investors to avoid buying UK shares. The FTSE 100 volatility index also rose 5.2 percent, further highlighting investors' nervousness ahead of Greek elections on June 17 which may determine whether or not the country stays within the euro currency bloc.
"People are clearly sitting on the sidelines. We're taking profits where we can and trying to remain in cash," said EGR Broking managing director Steven Mayne. Mayne said he had recently sold shares in mining companies such as Centamin Egypt and BHP Billiton but was considering buying shares in hedge fund Man Group, which fell 3.4 percent on Wednesday.
The price of gold, a traditional safe-haven asset in times of economic uncertainty, rose towards $1,625 an ounce on Wednesday and this in turn boosted FTSE-listed gold mining specialists Fresnillo and Randgold. Fresnillo topped the FTSE leaderboard, rising 4.1 percent, while Randgold Resources advanced by 2.1 percent. However, rival miners Xstrata and Glencore both fell sharply after broker Liberum Capital issued a cautious note over the two companies' plans to merge with one another.
Xstrata was the FTSE's worst-performing stock, falling 5.2 percent, while Glencore declined by 3.2 percent. Traders said they expected the FTSE to continue to trade within a tight range of between 5,200-5,500 points while worries over Europe's debt crisis remained.
Thurleigh Investment Managers fund manager Edward Allen, whose firm manages around 300 million pounds worth of assets, said Thurleigh had sold all its FTSE holdings last year and was not planning on buying back into the market for now. "We've got quite a lot of cash in our portfolios right now. We may buy more European shares if they fall further, but we think there's going to be too much continued volatility for now," he said.
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