Having fallen near five per cent over the previous three days, the mining sector rallied 1.8 per cent after China’s GDP surprised on the upside, dampening fears the world’s largest consumer of raw materials was heading for a hard landing.
Fresnillo gained 5.6 per cent after the silver miner said it would double output at its newly opened Saucito mine in central Mexico by 2015 or 2016 in a second phase of expansion.
Fresnillo’s shares hit a two-month high and rose with the price of silver, which has enjoyed a two-day rally as investors have sought the precious metal’s safe haven qualities in the face of the European debt crisis.
“News that (Fresnillo’s) plans to double output at its Mexican Saucito mine in the next four years in an effort to make it the world’s biggest overall silver producer has also given shareholders a lift,” Joshua Raymond, chief market strategist at City Index, said.
London’s blue chip index climbed 37.47 points or 0.6 per cent at 5,906.43, having fallen more than three per cent in the previous three days.
Comments from the US Federal Reserve on the possibility of more stimulative policies also boosted demand for equities.
“It was another volatile session but the data from China and comments from Ben Bernanke (chairman of the Fed) indicating aid for an ailing US economy proved enough to persuade investors to buy back in on the dips,” Jimmy Yates, head of equities at CMC Markets, said.
He said while the FTSE bounced off support levels around 5,860 the lack of conviction from traders to push the market beyond its current range reflected uncertainty over the current macro economic situation.
Burberry climbed 6.5 per cent after the maker of luxury goods beat first-quarter sales forecasts and raised expectations for its wholesale operations, boosted by overseas demand and travel retail.
British fashion retailer, SuperGroup, jumped 21 per cent, the top FTSE250 riser, on the back of better than expected full-year results, with pre-tax profits of £50.2m, up 89 per cent on last year. Marks & Spencer, however, shed 2.5 per cent, retracing all and more of Tuesday’s gains with the retailers’ first-quarter trading update “mixed”, said Singer Capital Markets.
Banks were also mixed as uncertainty over the outcome of Europe’s debt problems hamstrung the sector.
Eurozone plans for a summit on a second Greek rescue were thrown into doubt by Germany, raising fears markets may exploit a policy vacuum with a new onslaught on the bloc’s high debtors.
“Tentative signs of increased assistance to Greece and beyond are encouraging. However, the banks in Europe are inextricably linked to the sovereign spreads currently,” Goldman Sachs said in a note. “A near term convincing resolution to the funding issues could trigger a strong bounce in banks and the market, but inaction raises the risks of contagion and lower equity values.”
BSkyB, meanwhile, rose two per cent as News Corp withdrew its bid to buy out the 61 per cent of the broadcaster it does not already own after the government turned on Rupert Murdoch over the phone hacking scandal.