FTSE gains ground as mining shares are lifted by US data

BRITAIN’S top shares closed up yesterday as miners gained on firmer US economic data which eased investor anxiety on the global economic recovery, while ARM Holdings jumped on renewed takeover talk.

The FTSE 100 gained 23.66 points, or 0.5 per cent at 5,225.22, adding to the 0.9 per cent gain on Friday, as UK traders returned to their desks after a public holiday on Monday.

US consumer confidence rose modestly in August, lifted by a mild improvement in the short-term outlook, while the Standard & Poor’s/Case Shiller home price indexes showed prices of US single-family homes rose more than expected in June.

These data helped push US Stocks higher, and led to a slight improvement in the demand outlook which helped UK-listed miners gain ground.

Fresnillo and Rio Tinto added 3.2 and 2.4 per cent respectively.

Traders said that moves lacked conviction and that trading was set to remain thin and volatile until well into September when investors return from their summer break.

“The market’s like a headless chicken,” said David Buik, senior partner at BGC Partners.

“There are plenty of reasons not to sell, like strong yields and healthy balance sheets, but there are plenty of reasons not to buy which is why people are jumping on every piece of news.”

ARM Holdings was the star performer, up 8.6 per cent, and at its highest daily close since 2002 lifted by renewed takeover talk after Intel bought Infineon’s wireless unit.

The $1.7bn deal returned the M&A spotlight to the sector and represented news for the British company in the short-term as Intel indicated it will continue to support the ARM chip designs as used by Infineon.

The market was down in early trade, with weak mortgage lending data adding to the negative tone as total net lending fell to its lowest since March, Bank of England figures showed.

However the data was not all negative as there was an unexpected rise in British mortgage approvals and consumer credit in July.

The UK data came after US President Barack Obama fell short of addressing worries the recovery is faltering, and the Bank of Japan’s emergency moves failed to curb the yen’s strength.

Energy stocks were among the biggest drags on the index, pressured as crude fell below $73 per barrel.

Outsourcing company Serco fell 2.5 per cent as BofA Merrill Lynch cut its rating to “neutral” from “buy” ahead of the UK spending review in October.

British distributor Bunzl, which supplies carrier bags, take-away boxes and hard hats, gained 1.3 per cent after it beat forecasts with an 8 percent rise in first-half profit.

A growing belief among British investment managers that fears of a renewed economic slump are overblown has halted a five-month decline in allocations to stocks, according to a Reuters poll.