BRITAIN’S top shares rose yesterday, boosted by China’s move to allow a flexible yuan which lifted investors’ risk appetite and bolstered the demand outlook for commodities, underpinning gains in miners and banks.
The FTSE 100 ended 48.27 points higher, or 0.9 per cent, at 5,299.11, after it closed 0.1 per cent lower on Friday to end a seven-day winning run.
The index is up over 2.1 per cent in June after sharp falls in April and May, as fears over Europe’s debt problems have receded.
Metal prices firmed and crude rose to around $79 per barrel as China’s move melted
some uncertainty on demand from the resource-consuming giant.
Miners had the biggest impact on the index, with BHP Billiton and Rio Tinto gaining 4.7 and 5.0 per cent respectively, while Vedanta Resources was the star performer, up 6.0 per cent. Banks, which tend to move in tandem with investors’ appetite for risk, were firmly higher, with sector heavyweight HSBC gaining 1.7 per cent.
US indexes were higher on the back of China’s decision, helping sustain UK momentum, and ahead of the latest two-day Federal Reserve rate-setting meeting.
BP was the biggest drag on London’s blue-chip index, down 2.2 per cent on worries over the mounting costs faced by the energy major. The company has lost nearly 50 per cent of its value since the oil started gushing in April.
Other energy stocks, however, were buoyed by China’s move with Royal Dutch Shell and BG Group up 1.4 and 0.8 per cent respectively.
Defensive stocks, which tend to underperform when markets rise, were weaker as investors rotated out.