Miners, banks and positive US jobs data lift blue chip index

R ECENTLY beaten down mining stocks and banks rallied yesterday to help haul Britain’s leading shares index higher, as above-forecast US private payrolls data provided a positive signal ahead of Friday’s key US February jobs report.

The ADP National Employment Report said the US private sector added 216,000 jobs last month, topping economists’ expectations for a gain of 208,000 and helping allay some of the recent concerns over the health of the global economy.

At the close, the FTSE 100 index was up 25.61 points, or 0.4 per cent at 5,791.41, regaining some of Tuesday’s 1.9 per cent slide, its steepest one-day fall since mid-December.

Miners led the rally in London, having fallen nine per cent over the previous five trading days, as the relative strength index – a closely-watched technical indicator ­– suggested the sector was near oversold levels.

Chilean copper miner Antofagasta, however, missed out on the sector rally, shedding 0.6 per cent as its CEO Marcelo Awad resigned, surprising investors just a week before the company is due to publish full-year earnings.

Banks were higher, cheered by the US data and by hopes Greece’s private creditors will agree by the deadline today to participate in a bond exchange, a key part of a bailout programme to help Greece manage its wrecked finances and meet a debt repayment on 20 March.

However, if fewer than 75 per cent of creditors accept the offer, the debt swap could be off, potentially plunging the Eurozone back into crisis.

While the market falls had been causing concern among some investors that the recent rally could be running out of steam, Trevor Greetham, Portfolio Manager, Fidelity’s Multi Asset Funds, said he has been taking advantage of the dip to add further to his stock and commodity exposure.

Greetham said he has moved overweight risky assets in these funds for the first time since July 2011.

“I am concerned that the economic cycles seem to be getting shorter and shorter and more reliant on support from policy makers. However, markets are more likely to peak out over the summer months than now given continued improvements in macro data and the pre-announced mid-year end date for the Fed’s Operation Twist. I am buying the dip,” Greetham said in a note.

Among individual stocks in demand, Burberry added 3.2 per cent as the European Luxury goods sector rallied on renewed talk China will cut import taxes on luxury goods to boost consumption, following a report in The China Daily.

Burberry also got a boost from a target price hike by Goldman Sachs to 2,604.1p from 2,180p and a reiteration of its “Conviction Buy” stance on the stock in a note on Global Discretionary Retail.

Admiral Group was the top FTSE 100 gainer, up 10 per cent, buoyed by above-forecast full-year results and an easing of injury claims that forced it to issue a profit warning in November.

Ex-dividend factors knocked a total of 11.01 points off the FTSE 100 index yesterday, with seven blue chip firms trading without their payouts including BAT and CRH.

“Although the US ADP data bodes well for Friday’s US job data, the lack of real fireworks today appears to show there is little investor confidence to get involved until then,” said Mike Mason, trader at Sucden Financial Private Clients.