Hunger for mining shares sees FTSE stay above 6,000 level

MINERS lifted Britain’s top share index higher yesterday, driven by record metal prices and results from Randgold.

The FTSE 100 closed 53.65 points, or 0.9 per cent, firmer at 6,051.03, its highest finish since 18 January and marking the fourth gain in the past five trading days.

“A fresh year high is being eyed with worries over the impact euro zone debt problems and the political troubles in the Middle East fading,” CMC Markets head of equities Jimmy Yates said. “It will be interesting to see if traders have the mettle to see it through that level (6,090.49) and hold onto gains.”

Nicole Elliott, a technical analyst at Mizuho Corporate Bank, said the index was not far short of substantial resistance levels, with January’s high at around 6,090 and the 2006 high of 6,137 both being watched.

“All this is despite weaker-than-expected payrolls figures last Friday, and is a confirmation of the appetite investors still have for shares and how they are willing to shrug off the odd piece of disappointing-economic news. The next big target for the FTSE 100 is the 6,300 area, last seen in May 2008. Although shares in the UK have had a choppy start to the year, at the moment there is no reason to doubt that the buyers are still happy to pick up shares on weakness – it would not be surprising to see further gains as the week goes on,” said David Jones, chief market strategist at IG Index.

Miners added most points to the index, spurred by record copper prices and boosted by upbeat corporate results.

Randgold Resources, up 2.6 per cent, posted a 43 per cent jump in profit and raised its dividend 18 per cent.

Xstrata, set to report today, gained 3.6 per cent, helped by bullish comment from Citigroup and Nomura. Rio Tinto, which reports later in the week, was up 2.9 per cent.

Energy stocks climbed as appetite for riskier assets strengthened among investors, with BG Group 0.8 per cent higher ahead of results due today.

Can maker Rexam firmed 3.4 per cent. The company has appointed Barclays Capital to sell its beverage and specialties arm in a deal that could be worth £200m.

ARM Holdings was the top blue-chip gainer, 3.9 per cent higher, as Numis raised the chip designer’s price target to 660 pence on promising long-term revenue drivers.

On the downside, BT Group shed 1.5 per cent as investors locked in profit following results on 3 February.

Meanwhile, insurers Old Mutual and Resolution dipped 0.9 per cent and 1.6 per cent respectively on the back of recent strength. The sector has been supported by bullish broker comment and persistent M&A speculation.

Small-cap Lloyd’s of London insurer Chaucer said it had received takeover approaches from an unspecified number of suitors, lifting its shares 17 per cent.

There was little key economic data early this week for investors looking to the Bank of England’s monthly interest rate decision, due on Thursday. No changes were expected to the 0.5 per cent official bank rate or an increase to the BoE’s quantitative easing programme.

“I think we are seeing, with copper hitting a new high, that there is concern over inflation, and at some point, if it is not this week it will be very soon, that the Bank will raise rates,” Capital Spreads head of sales Angus Campbell said.

Money markets see a 10-20 per cent chance of a rise in the official bank rate on 10 February.