Mining firms haul FTSE 100 to highest level in five weeks

Strong miners pushed Britain’s top share index to a five-week closing high on Monday, buoyed by firmer metals prices on strong economic data from China, while sector consolidation moves gave oil services firms a fillip.

The FTSE 100 closed up 47.80 points, or 0.8 per cent, at 5,860.75, its highest close since 9 November, albeit in extremely light trade, as the UK market began its last full week before the Christmas holiday period.

Meanwhile, the FTSE 250 closed up 78.77 points, or 0.7 per cent, up at 11,359.73, while the FTSE 350 closed up 24.82 points or 0.8 per cent at 3,103.86.

Miners provided the main support for the blue-chip index after China’s industrial output in November beat expectations, sending copper to a record high.

Kazakh copper producer Kazakhmys was the top FTSE 100 riser, up 4.1 per cent.

Also in the top five gainers yesterday, Fresnillo closed up 3.98 per cent, while Antofagasta 3.07 per cent on similar sentiment.

Integrated oil stocks were in demand, with BG Group up 0.8 per cent, following the crude price higher.

Concerns remained over China’s soaring inflation, which sped to a 28-month high and showed signs of spreading beyond food prices, putting pressure on the government to ratchet up its monetary tightening policy.

“I think there’s a bit of short-term relief that despite the high inflation numbers, China’s authorities have yet to raise interest rates, although one suspects it could only be a matter of time before that happens,” Henk Potts, equity strategist at Barclays Wealth, said.

Oil services firms Petrofac and Amec rose 3.5 per cent and 2.1 per cent respectively, with traders citing a read-across from sector consolidation moves from mid-cap peers Wellstream and John Wood Group, with the FTSE 250 index hitting its highest since November 2007.

Wellstream, which agreed to about an £800m takeover offer from General Electric Co, added 5.8 per cent, while John Wood Group climbed 6.7 per cent after agreeing to buy unlisted Scotland-based rival PSN for $995m (£626.5m).

Sticking with the M&A theme, consumer goods firm Reckitt Benckiser put on 1.8 per cent after agreeing to buy privately held Indian ointments and personal care company Paras Pharmaceuticals for about $726m (£457.1m).

Insurer Prudential fell 0.6 per cent after Asian insurance group AIA said it has little interest in bidding for the Asian assets of the Pru.

Companies that have been the subject of recent vague bid talk were on the back foot, with security firm G4S and maker of replacement knees and hips Smith & Nephew among the heaviest fallers, both down 0.8 per cent.

Banking stocks, which have struggled against the backdrop of worries over sovereign debt problems in the euro zone, rose as risk appetite among investors improved slightly.

“There’s some optimism about what's going to happen in 2011. I think we could see steady but probably modest economic growth, interest rates likely to remain on hold, and a bright corporate picture helped by rising profitability,” Potts added.