Gold mining firms push FTSE higher despite fears over Spain and Greece

BRITAIN’S benchmark share index closed higher yesterday as gains in heavyweight gold-mining companies enabled the market to outperform rival European bourses, which fell on persistent worries over the Greek and Spanish debt crises.

The blue-chip FTSE 100 index ended up 10.07 points, or 0.2 per cent, at 5,483.81 points.

However, trading volumes remained relatively thin – coming in at around 90 per cent of the average 90-day FTSE volume – as worries over Spain’s debt-ridden banks and Greece’s future in the Eurozone caused many investors to avoid buying UK shares.

The FTSE 100 volatility index also rose 5.2 per cent, further highlighting investors’ nervousness ahead of Greek elections on 17 June which may determine whether or not the country stays within the euro currency bloc.

“People are clearly sitting on the sidelines. We’re taking profits where we can and trying to remain in cash,” said EGR Broking managing director Steven Mayne.

Mayne said he had recently sold shares in mining companies such as Centamin Egypt and BHP Billiton but was considering buying shares in hedge fund Man Group, which fell 3.4 per cent yesterday.

The price of gold, a traditional safe-haven asset in times of economic uncertainty, rose towards $1,625 an ounce yesterday and this in turn boosted FTSE-listed gold mining specialists Fresnillo and Randgold.

Fresnillo topped the FTSE leaderboard, rising 4.1 per cent, while Randgold Resources advanced by 2.1 per cent.

However, rival miners Xstrata and Glencore both fell sharply after broker Liberum Capital issued a cautious note over the two companies’ plans to merge with one another.

Xstrata was the FTSE’s worst-performing stock, falling 5.2 per cent, while Glencore declined by 3.2 per cent.

Traders said they expected the FTSE to continue to trade within a tight range of between 5,200-5,500 points while worries over Europe’s debt crisis remained.

Thurleigh Investment Managers fund manager Edward Allen, whose firm manages around £300m worth of assets, yesterday said Thurleigh had sold all its FTSE holdings last year and was not planning on buying back into the market for now.