Britain's top equity index turned higher in thin trade yesterday, as a strong start to trade on Wall Street helped lift mining stocks off their lows.
The blue-chip FTSE 100 index closed up 0.9 per cent higher at 6,137.60 points, turning higher as Wall Street gained following a climb in retail sales.
The move helped to reverse an early fall in mining stocks. The sector had been down as much as 4.2 per cent, but recovered to trade 0.7 per cent higher, helped as copper bounced off a one-week low.
Mining and commodities trader Glencore slumped almost eight per cent early on after three leading global thermal coal price benchmarks fell below levels last seen during the global financial crisis of 2008-2009. It too recovered all of its losses.
“The fact they straddle so many different production spheres within commodities has meant they’re getting hit most days, and the sentiment towards them is weak,” Alastair McCaig, market analyst at IG, said.
The FTSE hit a record high of 7,122.74 points in April, but has since been hit by signs of an economic slowdown in China and the prospect of a Fed rate rise, with commodity stocks leading the falls.
The gains came in below-average volumes, with the FTSE 100 seeing 95 per cent of its 90-day average volume traded.
Traders said volumes were likely to remain light before the most closely watched US Federal Reserve meeting in years on 17 September. The Fed must decide whether to raise interest rates for the first time since 2006.
“The worst thing that they can do would be a ‘hawkish hold’. That is, if they don't do anything, while saying that conditions are improving. That would… put us back to square one, and markets would remain very volatile,” said Ioan Smith, director at KCG Europe.
“They either need to surprise to the dovish side and rule out a hike in [the fourth quarter] or they need to hike.”
In other stock movers, home improvements retailer B&Q owner Kingfisher retreated 2.5 per cent after a fall in first-half adjusted pre-tax profits.
However, chip designer ARM rose 3.4 per cent after it said trading was in line with expectations.