Britain's leading shares ended up 1.3 percent on Thursday, with miners rising after Rio Tinto signed a cash deal to buy Canada's Alcan, and oil stocks were lifted as crude rose to an 11-month high. The FTSE 100 ended 82.6 points higher at 6,697.7.
Shares in mining stocks rose as Anglo-Australian miner Rio Tinto's $38.1 billion bid for Canadian rival Alcan raised hopes for more bids in the consolidating sector. Vedanta climbed 6.5 percent, while Antofagasta, added 6.4 percent, Xstrata was up 4.7 percent and BHP Billiton 4 percent. But shares in Rio, the world's second-biggest miner, slipped as much as 4.6 percent.
"By any stretch of the imagination Rio Tinto is paying a fulsome price to grab hold of Canadian aluminium group Alcan," said Howard Wheeldon, a senior strategist at BGC Partners. "While the growth of composite materials may slowly be eating into certain of the areas that aluminium has traditionally served there can be little doubt that demand for this metal will keep increasing."
In other commodities, London Brent crude hit 11-month highs above $76 a barrel, propelled by strong fundamentals and increased flows of fund money into the world's most actively traded commodity. BP tacked on 1 percent, while rival Royal Dutch Shell climbed 1.6 percent. The latter reversed earlier losses after UBS downgraded the stock to "neutral" from "buy".
"Once again the FTSE briefly tested territory below 6,600 during the session but a steady run of gains supported largely by the miners has seen the index now recover off these earlier lows," said one trader.
"But with such a strong open having been seen on Wall Street - the Dow is again setting new all time highs - markets arguably now have the potential to find support," he added. With little on the economic calendar, persistent concerns over US subprime mortgages weighed on real estate stocks, with Liberty International down 0.7 percent and Hammerson falling 0.9 percent.
Among other decliners, leisure group Whitbread dipped 2.5 percent as traders cited dwindling bid speculation which saw its stock rise by over 7 percent in the previous session. US property investor Starwood Capital Group was linked with a 2,400 pence per share bid for Whitbread on Wednesday.
Ahead of a quiet session on the corporate calendar on Friday, traders said US retail sales and consumer sentiment numbers will be closely watched for further economic clues across the Atlantic. British Airways gained 5.3 percent to feature among the top three FTSE 100 gainers, as traders said a recent two-day sell-off on high oil prices was overdone.
"BA has had a bounce back from a little bit of an oversold position," one trader said. "The crude price pressured the stock in the last few sessions." In other news, the board of directors of Spain's Iberia said it will open its books to private equity firm TPG, which is bidding for the airline, but only if TPG agrees to confidentiality.
So far, the consortium has only indicated it will make a 3.4 billion euro ($4.69 billion) offer. The consortium includes British Airways which owns 10 percent of Iberia. Also on the upside, Man Group added 4.1 percent after the world's largest listed hedge fund firm said its assets under management rose to $67 billion at end-June, up from $61.7 billion at end-March and that it was upbeat on prospects.
Credit information firm Experian Group fell 0.7 percent after it said its first-quarter trading was in line with expectations despite headwinds in its key US and British markets, with sales up 8 percent at constant exchange rates.
Comments
Comments are closed.