Miners buoy FTSE but ratings threat casts shadow

Mining stocks put the FTSE 100 on the front foot in early trading as metal prices rose - boosted by Goldman Sachs recommending investors to buy into commodities.

Commodities trader Glencore made its full market debt and rose slightly from its price on the so-call grey market, but remained below the 530p offer price of its record float.

Against the share rises in the mining sector the threat of downgrades for 14 British financial companies, including Lloyds and RBS, by Moody's cast a shadow over the market.

The warning followed the rating agency's prediction that a Greek debt default would hit others in the Eurozone.

Fears that Spain's package of austerity measures would unravel after the riling Socialist government was beaten in regional elections added to the air of uncertainty.

A lowering of China's growth estimates after its monetary tightening was also being digested by investors, traders and analysts.

Meanwhile the Office for National Statistics said public sector net borrowing was £10bn in April, excluding the government's interventions in the financial sector.

That compares with the £7.3 bn the government borrowed in April 2010 and is the highest on record for the month.

On London's blue chip index all the top five climbers in early trading were miners as the sector flourished. Antofagasta was up 3.5 per cent, with Kazakhmys, Eurasian, Xstrata and Anglo American all climbing by more than two per cent.

On the down side Marks and Spencer dropped 1.3 per cent after it warned of a tough outlook despite reporting a healthy rise in annual profit.

Lloyds Group was down one per cent after Moody's rating downgrade threat dented the stock. There were ripples across the finance sector with Barclays down 0.7 per cent.

Other significant fallers included Primark owner AB Foods, down 0.7 per cent.

Asian equities post modest gains on closing today - steadying as commodity prices rallied, with copper up 0.9 per cent. They were buoyed by the advice from Goldman that Copper, oil and zinc were good buys.

But US stocks closed at their lowest levels in a month in a sign of increasing doubt that equity markets can weather recent weakness in global manufacturing and demand.