BRITAIN’S top shares rose yesterday, led by miners, as investors’ attention shifted from the Euro zone debt crisis towards economic data from China.
Mining stocks tracked metals prices higher as markets eyed a batch of Chinese data due today, including GDP and industrial production, for further clues on the outlook for demand.
“There’s a perception that maybe the Chinese will ease monetary policy at some point this week to try and prevent a hard landing, so I think that’s giving a slightly more positive bias to metals prices,” Michael Hewson, market analyst at CMC Markets, said.
Friday’s downgrades from the Standard & Poor’s credit agency, which included stripping France and Austria of their triple-A ratings, came as talks between Athens and private creditors on a debt swap deal – seen as crucial to avoiding a messy Greek default -- broke down.
The news had trailed a positive start to the year, with Spain and Italy drawing solid demand at their debt auctions last week, dousing worries about a regional credit freeze.
“I don’t think you should be totally negative about what we saw from the Eurozone,” Henk Potts, market strategist at Barclays Wealth, said.
“If you take demand and yields as a sign of confidence that European officials can solve the debt crisis, there were some positives to hang on to.”
The UK benchmark closed up 20.80 points, or 0.4 per cent, at 5,657.44, in thin, choppy trade, with US equity markets closed for the Martin Luther King holiday.
Trading volume on the FTSE 100 was 76 per cent of its 90-day daily average.
Carnival plummeted 16.5 per cent, easily topping the FTSE 100 fallers’ list, after the owner of the cruise ship that capsized off Italy’s west coast said its 2012 earnings would take a $90m hit.
Analysts said the cruise ship industry has a tough job to restore confidence among customers shocked by images of the wreck of the Costa Concordia, but that the effects of the accident over time will be minimal.
“Obviously tragic, it will have a short-term impact on yields, but I don’t think customers are going to stop travelling on cruise ships because of one accident in 100 years,” an analyst, who declined to be named, said.
Carnival saw robust trading volume, at more than nine times its 90-day daily average.
Kingfisher, off 2.1 per cent, was the second-heaviest faller, pressured as Citigroup cut its rating for the home improvements retailer to “neutral” as part of a cautious review of the European retail sector.
Negative broker sentiment also hit Capita, down 1.6 per cent, with BofA Merrill Lynch and Collins Stewart downgrading their ratings for the outsourcing group, citing disappointment over recent contract news.
The third biggest faller was Inmarsat, whose shares fell 13 per cent yesterday after attention was drawn to potential GPS interference from LightSquared, a network which rents spectrum from Inmarsat.
The government agency’s report could affect LightSquared’s plans to build a wireless broadband network across the US, which could in turn impinge on payments to Inmarsat.
Shares recovered during the day, closing down five per cent at £3.98.