FTSE edges up as hunger for mining shares boosts trading

BRITAIN’S leading shares edged higher yesterday, matching modest gains on Wall Street following above-forecast US retail sales data, with commodity issues standing out.

At the close, the FTSE 100 index was up 1.88 points, or 0.1 per cent, at 5,567.41, marginally extending Monday’s four-month closing high.

“The last-minute push higher by bulls gives further evidence that investors are hungry for risk and with five gains on the trot now, the market looks stronger and stronger as volumes pick up again after the summer break,” said Angus Campbell, head of sales at Capital Spreads.

Heavyweight miners posted the best gains, with Randgold Resources and Fresnillo up 2.8 per cent and 2.6 per cent respectively, as gold hit a record high and copper pared losses as better-than-expected US retail sales data boosted demand expectations.

Crude prices also benefited oil issues, with Essar Energy the top FTSE 100 gainer, up 3.8 per cent.

US blue chips were 0.3 per cent higher by London’s close, with the above-forecast August retail sales numbers helping allay fears over a double-dip recession.

Meanwhile, British inflation defied expectations of a fall in August and held steady at the level that last month forced the Bank of England to write a public letter to explain why prices were rising so fast.

Among individual gainers in London, outsourcing group Capita added 2.9 per cent, while
midcap peer Logica rose 4.7 per cent as Capgemini UK initialled a deal with the UK government which reassured investors about public sector contracts.

Defence group Cobham was another good gainer, up 2.0 per cent after Credit Suisse upgraded its rating on the stock to “outperform” from “neutral”, saying it has increased its earnings per share estimate for 2010.

ARM Holdings was the top individual FTSE 100 faller, losing 4.0 per cent after the chip maker said directors and executives of the company sold shares on Friday and Monday.

Traders also noted fading bid speculation for ARM, with US rival Intel, which has previously been mentioned as a possible bidder, having said it plans no further acquisitions in the short term.

Elsewhere, TUI Travel shed 1.8 per cent, after BofA Merrill Lynch cut its rating for the tour operator to “neutral” from “buy” and reduced its target price to 230 pence from 270 pence in a review of the European travel sector.

Broker comment also hit Next, down 2.1 per cent after Societe Generale cut its rating on the fashion chain to “sell” from “hold” ahead of first-half results due tomorrow.

And fellow retailer Home Retail Group lost 1.5 per cent after Nomura cut its stance to “reduce” from “hold”.

Defensively-perceived tobaccos were the worst performing blue chips as a sector, with Imperial Tobacco falling 0.6 per cent, while British American Tobacco lost 0.8 per cent.