By Sudip Kar-Gupta
LONDON (Reuters) – A rise in heavyweight mining stocks lifted Britain’s top equity index on Monday, pushing the UK stock market back towards its highest level since early 2000.
The blue-chip FTSE 100 index was up by 0.2 percent, or 13.84 points, at 6,828.41 points in mid-session trading – within touching distance of a peak of 6,867.42 points reached in January which was close to its highest level since early 2000.
Mining stocks added the most points to the FTSE, with Rio Tinto rising 2.9 percent while BHP Billiton gained 1.8 percent, after investment bank JP Morgan raised its rating on the sector to “overweight” from “underweight”.
Although the mining sector has been dogged by concerns about an economic slowdown in China – which is the world’s biggest metals consumer – JP Morgan pointed to signs of a rebound in Chinese economic activity.
Earlier this month, data showed that China’s exports and imports had returned to slight growth in April as orders to the United States and European Union surged, offering some positive signals for the world’s second-largest economy after a weaker-than-expected start to 2014.
“I think there is more upside in the miners,” said Edward Smyth, investment manager at JNF Capital.
Smyth said he would keep small “long” positions betting on further gains on the FTSE up to the 6,875 points level.
Macquarie strategist Daniel McCormack said that while concerns over Ukraine, where Kiev authorities have clashed with pro-Moscow supporters, could curb the FTSE’s progress in the near-term, he was more bullish over the longer term.
“Longer term, there is still quite a bit of upside to come because I do think that earnings will improve. We have still got scope for an earnings-driven rally on a 12 to 18-month view,” he said.
(additional reporting by Atul Prakash, editing by Louise Heavens)
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