By Alistair Smout
LONDON (Reuters) – Britain’s top share index steadied on Tuesday after five straight sessions of falls, with miners and financials rebounding as concerns over emerging markets began to ease.
The stabilisation of a recent emerging market sell-off that has roiled global stock markets in the last week offered a chance for some of the shares that have been worst hit to rally off their lows.
The FTSE 100 index has lost 4.2 percent since last Tuesday, and posted five straight sessions of losses for the first time since December 2013. The index only saw five straight down days on one other occasion in 2013, in March.
Miners gained 0.9 percent on Tuesday and accounted for many of the top blue chip risers, having dropped 5.3 percent since the beginning of last week, supported by a firmer Australian dollar.
The week-long drop in the sector was triggered by weaker than expected manufacturing survey data out of China, the world’s biggest metals consumer.
“We’re seeing some stabilisation, and in Australia, their currency is holding up, which is going to be a help for the miners today,” said Will Hedden, sales trader at IG.
“They suffered from the emerging market theme, as well as the trigger of weak China numbers, so it’s no surprise to see a little bit of bargain hunting.”
Fund manager Aberdeen Asset Management, which has a very high exposure to emerging markets and is down 20 percent already this year, was up 2.2 percent, rallying off of three-month lows to be the top individual gainer on the FTSE 100.
Top faller was chip producer ARM, which dropped 2.7 percent after Apple reported a drop in iPhone sales, sending shares as much as 8 percent lower. ARM licenses chips for use in Apple products.
The FTSE 11 was 20.05 points higher, up 0.3 percent, at 5,670.71 at 0838 GMT, with technical signals also pointing to a rebound after the week’s steep falls.
The sell-off has seen the index drop from technically overbought conditions, according to the seven-day relative strength indicator (RSI), into oversold territory in less than a week.
“Technical indicators have fallen to relatively oversold levels and it would not be at all surprising if some traders were tempted in at current levels,” Bill McNamara, technical analyst at Charles Stanley, said.
“In the near term, however, it looks like we should continue to expect high levels of volatility.”
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