MINING stocks helped take the FTSE 100 close to another record high yesterday while potential deal activity also gave the stock market a boost.
Miners such as Anglo American, Rio Tinto and BHP Billiton rose 2.8 to 4.1 per cent as metal prices bounced up off their earlier lows. The UK mining index was up three per cent.
Britain’s top equity index closed 0.2 per cent higher at 7,075.26 points, finishing close to a record high of 7,095.36 points reached on 10 April.
Traders also said signs of takeover activity, with Nokia planning to buy telecoms peer Alcatel-Lucent just a week after Royal Dutch Shell’s bid for energy rival BG, were propping up stock markets. Alcatel-Lucent shares were up 16 per cent.
Admiral Markets’ Darren Sinden said those investing in the FTSE 100 had taken heart from the pick-up in M&A activity, and from the fact that it had managed to stay above a key level.
“We’ve managed to hold above 7,000 points, and signs of M&A are always welcome in the market,” said Sinden.
Barclays rose more than one per cent, with traders citing a Credit Suisse note saying Barclays was its second-favourite European investment banking stock behind UBS.
The note said Credit Suisse remained cautious on the sector’s overall prospects, however, due to tougher regulation and litigation issues.
Analysts said an improving economic outlook and British consumer price inflation data, which held steady at a record-low zero percent in March, should be positive for the market.
“Falling inflation has largely been driven by falling fuel and food costs, and this should be positive for the economy,” said Ben Brettell, senior economist at Hargreaves Lansdown.
Uncertainty before next month’s General Election has weakened sterling, but the FTSE 100 has continued to push higher. Traders have said a weak pound could help the exports of the FTSE’s international companies, and the FTSE remains up eight per cent since the start of 2015.
Aberdeen Asset Management fell 2.5 per cent after investment bank RBC cut its rating on the stock from “sector perform” to “underperform” .
On the continent, European stocks fell on as renewed worries over Greece offset more positive M&A news.
A rebound in the euro prompted investors to book recent gains on the shares of exporters. Luxury goods maker LVMH fell 2.5 per cent and airplane maker Airbus lost 2.6 per cent.