Surging mining stocks and a surprise rise in Tesco’s shares buoyed the London market yesterday, with the FTSE 100 ending at its highest closing level since the summer.
The blue-chip index finished up 0.2 per cent at 6,336.35 points – its highest closing level since 20 August.
The FTSE came down off its earlier intraday highs towards the end of the trading session, as a dip in the New York market had an impact on global equities. However, it nevertheless notched up its sixth straight session of gains.
It remains some 10 per cent below a record high of 7,122.74 points reached in April, but some traders were encouraged by its recent recovery.
“The FTSE has finally pushed its way through the 6,300 level for the first time since late August. This is more than a little bullish and tends to set the scene for a bigger move higher should the momentum carry,” London Capital Group head analyst, Brenda Kelly, said.
The FTSE was also supported by a rebound in the mining sector, which rose 5.8 per cent following a rally in metals prices. Morgan Stanley strategists upgraded miners from “underweight” to “overweight”. Shares in Anglo American surged around 10 per cent while smaller rival Lonmin, which is outside the FTSE 100 index, jumped 34 per cent.
Tesco’s first-half profits slumped 55 per cent although the high street giant said it was trading ahead of expectations and outperforming rivals. Its shares initially fell nearly three per cent, but then recovered to end 2.5 per cent higher.
“Tesco did not have a great set of numbers, but they were marginally better than expected. In the medium term, it’s still a strong business, but in the short term they still have hurdles to overcome in terms of competition from cheaper rivals,” Charles Hanover Investments partner, Dafydd Davies, said.
SABMiller also edged up 0.3 per cent after it rejected an improved £42.15 per share offer from Anheuser-Busch InBev. The shares remained below the offer price, indicating some nervousness over whether a deal would be sealed.
Airline stocks lagged the market rally. British Airways-owner International Airlines Group and easyJet both fell after Credit Suisse cut the sector to “equalweight” from “overweight”, saying a stabilisation in the oil price would weigh on them, since cheaper oil prices often boost airline stocks.