HeAVYWEIGHT miner Rio Tinto helped keep the FTSE 100 in positive territory yesterday, offsetting weakness in housebuilders after the Bank of England removed a mortgage support scheme.
Rio Tinto enjoyed hefty gains in an otherwise subdued session – adding six points on its own to the FTSE 100 – as investors responded bullishly to the company’s new growth plans.
The announcement provided a much needed lift to a sector, which remains down 19 per cent in 2013 and dogged by ongoing concerns over the outlook for growth given the slowdown in China, the world’s most voracious consumer of raw materials.
Britain’s top share index closed up five points, or 0.1 per cent, at 6,654.47, following a fresh record high on Wall Street overnight. World stock markets remain underpinned by central banks’ commitment to equity-friendly monetary policy.
“Another strong close from US markets last night has provided the springboard for the FTSE to edge higher,” said Toby Morris, senior sales Trader at CMC Markets.
London’s blue chip index traded in a tight 27 point range, however, as Wall Street’s shutdown for Thanksgiving kept volumes low and the market without direction.
British housebuilders were among the most traded stocks.
Persimmon shed 6.1 per cent in double its average daily volumes after governor Mark Carney said the Bank would refocus its Funding for Lending scheme on loans to small firms to avoid fuelling house price inflation. FTSE 250 peers Taylor Wimpey and Bovis Homes fell 6.2 per cent and 4.8 per cent respectively as investors fretted about the change in the scheme which had contributed to a rebound in the housing market and helped UK housebuilders rise around 70 per cent in 2013.
Kingfisher tumbled 4.3 per cent after Europe’s biggest home improvements retailer posted third-quarter profit at the lower end of forecasts and cautioned that markets remained tough, particularly in France. Plumbing supplies group Wolseley and the world’s biggest catering company Compass Group also both warned of tough conditions in Europe. Their shares fell 1.7 and 1.8 per cent, respectively.
Imperial Tobacco and British American Tobacco fell on reports that the government is set to announce a review of cigarette packaging.