FTSE lifted as investors seek value in miners

BRITAIN’S FTSE 100 rose yesterday, building on a recent robust advance as stronger miners eclipsed downbeat corporate earnings news, with some technical analysts putting the index’s 2007 high in the crosshairs.

The FTSE 100 closed up 10.83 points, or 0.2 per cent at 6,442.59, having lurched 2.4 per cent higher in the previous two sessions when weak German data raised expectations of a European Central Bank rate cut.

“It’s looking good really... I think the consolidation [seen since mid-March] is ending,” Valerie Gastaldy, technical analyst at Day By Day, said. “I expect next week we will be passing the 6,534 mark [the 2013 high]... The FTSE has strong overhead resistance at 6,754, the 2007 high, so I would say that’s the target for the end of May.”

Miners – whose steep slump earlier this year means investors are increasingly seeing value – were in demand, cheered by the prospect of further economic stimulus alongside a pick-up in copper and gold prices.

Randgold Resources led the market higher with a 5.4 per cent rise, followed by Antofagasta, up 4.6 per cent, and Vedanta Resources, 4.1 per cent ahead.

Among FTSE 250 stocks, Kazakh miner Kazakhmys advanced 4.3 per cent after its first-quarter copper output rose almost 12 per cent year-on-year.

The sector is trading at just 10.7 times its expected earnings for this year, according to Thomson Reuters StarMine data, significantly below the 12.1 times average for the FTSE 100.

The UK benchmark was little changed by data showing Britain’s economy grew faster than expected in the first three months of the year.

But the muted reaction was unsurprising, traders said, given a large proportion of UK blue chips generate revenues overseas.

Weak corporate results weighed on the market, with drug-maker AstraZeneca among the top fallers, down 1.9 per cent, after its sales dropped by a bigger-than-expected

13 per cent in the first quarter as patent expiries took a heavy toll.

The earnings season has got off to a lacklustre start. Of the 22 per cent of Stoxx Europe 600 firms to have posted first-quarter results so far, about 47 per cent have missed analysts’ forecasts, according to Thomson Reuters StarMine.

Consumer goods firm Unilever was the biggest laggard, suffering a three per cent drop after its sales growth undershot market estimates.

Some analysts, however, chose not to take a hard line on the stock, whose shares have jumped nearly 17 per cent in 2013 against a 9.2 per cent rise on the FTSE 100 over the period.