FTSE in-depth: Miners shine in choppy session
Mining stocks grabbed the spotlight in a choppy session on the Footsie.
Quiet day: The Footsie, like many City traders, had an air of the holiday season about it
Analysts at Barclays Capital said fears of a sharp slowdown in global growth seem to have eased and supply challenges are more widely appreciated, fuelling the attractiveness of stocks like Xstrata, Rio Tinto and BHP Billiton.
'Most investors now appear to have a more benign view that China will have a soft landing and that if growth in China slows too quickly the government will introduce new stimulus to ensure growth that is strong enough to continue to create jobs,' they wrote in a note.
Shares in Xstrata rose 18.4p to 1014p, Kazakhmys was up 20p at 1176p, Anglo American strengthened by 38.5p to 2409p and Randgold Resources gained 75p to 5585p. Strengthening gold and copper prices helped fuel the gains, which saw second liner Petropavlovsk, formerly known as Peter Hambro Mining, also advance to close 29p higher at 1023.1p.
Meanwhile, blue chip oil group Cairn Energy was the top riser with gains of 24.9p to 493.2p after agreeing to sell most of its holding in Cairn India to Vedanta Resources. Vedanta was also bid higher, closing 100p up at 2153p.
'Capturing value now and sidestepping the technical risks shows Sir Bill (Gammell) hasn't forgotten some of his old skills,' Evolution's Richard Griffith said.
He lifted his price target on Cairn to 542p from 417p and upgraded the stock to 'add' from 'neutral'.
The Footsie, like many City traders, had an air of the holiday season about it as it ticked up just 0.66 points to close at 5276.1.
And across the pond on Wall Street, the street of dreams was initially spooked by weak housebuilding data, compounded by falls in the price of crude oil for September delivery. US home- builder sentiment dropped in August for the third month in a row, falling back to its lowest level in a year and a half. But gains on the tech-heavy Nasdaq managed to lift sentiment following a weak start.
The financial sector came under pressure as concerns over economic growth persisted following Japan's poor second- quarter growth figures, which saw China overtake it to become the world's second-largest economy.
Blue chip casualties included Royal Bank of Scotland, 1.05p lighter at 45.9p, while Lloyds was 0.83p off at 69.41p.
Insurer Aviva was also on the losing side after falling 9.5p to 377.9p, having spurned RSA's bid for its general insurance business. RSA was down 2.9p at 124.5p.
Second-line asset manager Hargreaves Lansdown bucked the trend among the financial stocks, frothing up 22p to 404p.
De la Rue continued to squirm after the resignation last week of its chief executive amid allegations of problems within the bank note printer's paper production unit. The shares slid 20p to 688p.
Meanwhile, housebuilders and construction services groups fell out of favour after Rightmove said house prices in the UK fell in the month to August 7, as the holiday season coincided with increased stock, fuelling fears that the economy is still stalling. McBride fell 6.3p to 128.2p, while Connaught was down 0.73p to 15.74p.
Premier Foods lost 0.67p to 17.89p, undermined by Investec downgrading 2011 estimates after suggesting that draconian wheat price inflation has cast a pall over management's emerging recovery plan.
Brokerage Investec said: 'Premier's recent first-half results felt like a first tentative step on the Yellow Brick Road. But they are a long way from Kansas. Despite the positive surprise, trading profit is still down and pretax profit is taking an additional hit from punitive financing terms.'
The broker advised the stock a 'hold' and said investors can afford to wait for firmer evidence of recovery.
On the upside, Hunting jumped 37p to 561.5p, after acquiring Houston-based Innova-Extel, which supplies electronics technology to oil and gas companies, for £80m. The move, which is expected to add to earnings from this year, prompted an upgrade to 'buy' and a price target rise to 675p from analysts at Evolution.
Among smaller caps, beleaguered building firm Rok, which last week suspended its finance director amid worries about substandard accounting in its plumbing business, added 2.5p to 19.25p.
AIM-listed Central China Goldfields, soon to be renamed GGG Resources Plc, jumped 2.25p to close at 6.75p after external consultants increased the mineral potential at the Western Australian gold mine it acquired in May 2010. The Bullabulling Project could now become a 'significant new gold project' once it goes into production in 2013.
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