By Tricia Wright
LONDON (Reuters) – Britain’s top shares rose on Friday, underpinned by strength among miners on optimism that any move from China to increase infrastructure spending would lift demand for industrial metals.
The FTSE 350 Mining Index led the risers, up 2.2 percent, after Chinese Premier Li Keqiang said Beijing was ready to support the cooling economy and would push ahead with infrastructure investment.
The sector dominated the FTSE 100 leader board, with Anglo American, Glencore Xstrata, and Rio Tinto notching up gains of between 2.1 and 2.8 percent.
China’s economic health tends to affect the FTSE 100 given the mining sector’s heavy weighting. It is the fourth-biggest sector within the UK benchmark, accounting for almost 9 percent of the index, data from index compiler FTSE showed.
“The current belief that China is not going to let the economy fall too much should be supportive for the FTSE, and especially for the miners which on a relative basis have become attractive to some investors,” said Lex van Dam, hedge fund manager at Hampstead Capital.
The STOXX Europe 600 Basic Resources index trades at a 12-month forward price/earnings ratio of 11.7 times, against a late February peak of 12.9 times, Thomson Reuters Datastream shows.
“It’s a volatile sector but I think you would want to be long miners,” said Joe Rundle, head of trading at ETX Capital, adding that he had a preference for Rio Tinto.
The UK benchmark was up 36.31 points, or 0.6 percent, at 6,624.63 points by 0846 GMT, having slipped 0.3 percent on Thursday. The index has been stuck in a range between around 6,400 to 6,800 since late October.
While the index was set to record a fall of nearly 2 percent for the quarter, pegged back by concerns over China’s pace of economic growth and geopolitical tension over Ukraine, traders remain upbeat about its prospects.
“Negative sentiment has probably been a bit overdone… It’s the last day of the quarter (on Monday) so I think you’ll see a bit of money coming into the market which has been sitting on the sidelines. I’m positive for the markets,” ETX’s Rundle said.
(Reporting by Tricia Wright; editing by Tom Pfeiffer)
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