Miners help to push FTSE 100 to fresh record

LONDON REPORT

THE FTSE 100 set fresh five-year highs yesterday, with miners boosted by good results from Antofagasta and the market underpinned by low volatility and a strong technical picture.

Antofagasta gained 3.1 per cent in volume of 2.8 times its 90-day average after posting a rise in revenue and hiking its dividend payout.

The results lifted the sector, with volatile copper-focused peer Kazakhmys up six per cent to lead the index, and fellow miners Rio Tinto and Fresnillo paring early losses despite reporting some snags.

“We’ve seen a lot of interest in Antofagasta after it doubled its dividend payout, and that's helping boost the mining sector as a whole,” Michael Hewson, analyst at CMC Markets, said.

Fresnillo, which had fallen as much as five per cent after reporting slumping profit, closed only 0.6 per cent lower, and Rio Tinto reversed an early dip to eke out a 0.3 per cent gain despite slowing progress in developing a multi-billion investment in Guinea.

That improvement among the fallers helped the miners, which had been flat at midday, to close 0.5 per cent higher, and a boost to the index, which had also traded flat in the morning session.

The FTSE 100 closed 6.99 points higher, up 0.1 per cent, at 6,510.62, the index’s highest close since 2007.

Despite these heady heights, investors appear relaxed about the potential for sharp falls in major stock markets.

Volatility on the FTSE fell 4.1 per cent, tracking a fall in US volatility overnight. The crude gauge of investor nervousness closed below 12 for the first time since 2007 on Monday, meaning investors appear more sanguine than they have been since the credit crisis began.

While the heavyweight miners helped the broader index into positive territory at the margin, the travel and leisure sector was the biggest gainer in percentage terms, up 0.9 per cent.

Intercontinental Airlines Group led travel firms up, gaining 4.8 per cent on hopes that a resolution to its ongoing industrial dispute in Spain at its loss-making Iberia unit was imminent.

Other travel firms also rallied, with Tui Travel up three per cent after UBS initiated coverage on its parent Tui AG with a buy rating.

Intercontinental Hotels was a top riser in the leisure sector, adding 1.8 per cent after UBS upgraded the company to “neutral” from “sell”.

On the downside, three of the top four were real estate investment firms, with British Land topping the fallers.

It fell 4.5 per cent in volume of nearly seven times its 90-day average after it opted to tap the market for £500m – diluting the value of its shares – to fund new investment and sold off part of its London portfolio.