LONDON (ShareCast) - (Sharecast News) - London stocks ended Tuesday in mixed territory, with strength in the mining sector offset by weakness among mid-caps.
The FTSE 100 added 0.23% to close at 9,242.53, supported by gains in heavyweight miners after Anglo American announced a merger with Canada's Teck Resources, while the more domestically focused FTSE 250 slipped 0.4% to finish at 21,596.71.

"Global markets maintained their upswing for the fifth consecutive day on Tuesday, fuelled by optimism surrounding a potential reduction in US interest rates," said Patrick Munnelly, market strategy partner at TickMill.

"This sentiment spilt over to Asia, sparking a rally in technology stocks.

"MSCI's global stock index appeared poised to close at another record high, with major tech players like TSMC and Alibaba driving gains in Asian markets."

In currency markets, sterling was last down 0.1% on the dollar to trade at $1.3532, while it firmed 0.23% against the euro, changing hands at €1.1541.

UK retail sales grow solidly in August

In economic news, UK retail sales grew firmly in August, extending a strong run through the summer as warmer weather and a recent interest rate cut supported activity, according to the British Retail Consortium.

Total sales rose 3.1% year-on-year, the BRC-KPMG retail sales monitor showed on Tuesday, ahead of July's 2.5% increase and well above the 12-month average growth of 2%.

Food sales accelerated to 4.7% from 3.9% in July, though the BRC noted much of the increase reflected higher prices, with food inflation running at 4%.

Non-food sales also picked up, rising 1.8% compared with 1.4% previously, with in-store sales up 1.3% and online sales climbing 2.7%.

"Sunny weather and an interest rate cut helped August round off a solid summer of sales," said BRC chief executive Helen Dickinson.

She highlighted strength in computing and gaming, while furniture sales improved for a second month.

However, she noted that "new school clothing and footwear did not sell as well as expected, as some families opted for second-hand purchases."

Despite the upbeat summer, Dickinson cautioned that retailers were wary heading into the peak trading season.

"With the later-than-expected Budget falling just days before Black Friday, many are uneasy about how consumer confidence and spending could be impacted by tax rise speculation in the run-up to Christmas," she said.

Munnelly added that "the UK finds itself in a similar scenario ahead of the Budget announcement on 26 November.

"Ultimately, government policy decisions will likely play a significant role in driving cross-market gilt yield spreads."

Anglo American merger leads miners higher, Dunelm in the red

On London's equity markets, mining stocks were in the green after Anglo American unveiled a landmark deal with Canada's Teck Resources.

Anglo surged 9.07% as the two companies agreed to merge in an all-share deal to create Anglo Teck, a copper-focused group headquartered in Canada.

The tie-up was expected to give investors more than 70% exposure to copper, alongside $800m in annual cost synergies and a $1.4bn EBITDA uplift from Chilean asset integration.

"Anglo American has turned from prey to predator," quipped Russ Mould, investment director at AJ Bell.

"The deal to buy Teck Resources, if it completes, means Anglo has not only pulled itself out of a hole, but also sends a message to mining peers that it is not a pushover.

"Combining with Teck will give Anglo greater scale in copper, a commodity in strong demand thanks to its key role in the transition to clean energy."

He cautioned that "transformational deals rarely add value as companies either overpay, cost synergies often aren't as strong as first thought, and cultural clashes can lead to all kinds of disruption.

"Despite the uncertainties, there is one immediate benefit.

"The deal is a win for the UK stock market as the enlarged Anglo Teck group will have its primary listing in London."

The news lifted the broader sector, with Glencore up 5.29% and Antofagasta ahead 1.95%.

Endeavour Mining also gained 1.37% as gold prices touched a new record high on growing expectations of further Federal Reserve rate cuts.

Outside mining, Computacenter rose 3.78% after posting a dip in first-half profit but striking an upbeat outlook.

Mould noted: "Among UK mid-caps, Computacenter jumped on a bullish update, with North America firing on all cylinders and the UK returning to growth."

Segro also advanced 1% after Goldman Sachs upgraded the stock to 'buy'.

On the downside, Dunelm Group slumped 9.99% after reporting full-year results that highlighted pressure on margins and rising debt despite higher sales and profits.

"Dunelm is holding its head above water in a tricky retail environment, yet investors clearly want more judging by the negative market response," said Mould.

He added that while chief executive Nick Wilkinson could be proud of the company's growth, "the lack of evidence of a sustained consumer recovery weighed on sentiment as he departs the role."

Reporting by Josh White for Sharecast.com.

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