Energy and mining stocks yesterday advanced on the back of stronger commodity prices as Britain’s top shares index extended gains from Monday’s session.
The blue-chip FTSE 100 index, which surged 2.8 per cent on Monday, ended 0.4 per cent higher at 6,326.16 points. The index, however, is still down about 3.5 per cent this year and is trading about 10 per cent below a record high of 7,122.74 points reached in April.
The UK Oil and Gas index rose 3.1 per cent, the top sectoral gainer, after crude oil prices rose on signals that the world’s biggest producers of crude may act jointly to support prices.
The mining index gained 0.7 per cent as prices of industrial metals rose.
Royal Dutch Shell “B” shares ended up four per cent, BG Group added 2.8 per cent, BP rose 2.7 per cent, and mid-cap stock Tullow Oil closed up 6.8 per cent.
“A rally in commodities has boosted oil majors and miners, but I don’t think this is the beginning of an upward trend in commodity shares,” Jawaid Afsar, senior trader at Securequity, said.
“The bounce may lead to some profit taking and commodity prices may slip again, once Chinese investors return after a holiday.”
Mining and trading giant Glencore, which fell to record lows late last month on worries over its debts and falling prices for commodities, rose 2.5 per cent after surging 21 per cent in the previous session.
On the downside, SABMiller fell 3.8 per cent, with traders citing a report that it rejected an informal offer from AB Inbev.
SABMiller reported a rise in sales volumes, thanks to growth in Latin America and Africa. However, reported revenues fell by nine per cent due to the depreciation of emerging market currencies against the US dollar.
Supermarkets ended among the best blue-chip performers after Barclays suggested that Tesco’s half year earnings update, due tomorrow, can reignite the positivity generated last week by Sainsbury’s upgrade to profit forecasts. Morrison ended up 3.2 per cent, Tesco up 0.8 per cent and Sainsbury’s up 2.1 per cent.
In the mid-caps, baker Greggs jumped 7.6 per cent after saying that growth for the year will be ahead of its forecast, its third increase in full-year guidance in less than six months.