Mining lifts FTSE while banks drag

BRITAIN’S top share index closed slightly higher yesterday as stronger mining stocks offset falls from banks still dogged by investor concerns over sovereign debt.

The FTSE 100 closed 5.02 points, or 0.1 per cent, higher at 5,578.44 in skittish trading, with the index having dipped as low as 5,506.07.

Miners were in demand, boosted by firmer copper as the dollar fell after unexpectedly weak consumer confidence data from the United States.

Randgold Resources was among the top blue-chip risers, up 2.2 per cent, as gold hit a record high.

Concerns about the debt situation in peripheral Eurozone countries kept investors wary, but these fears were offset by data showing Britain’s recovery is on track and retail sales were stronger than forecast.

Standard & Poor’s warned it may cut Ireland’s credit rating if the country poured more than €35bn into Anglo Irish Bank.

Risk-sensitive banks exerted downward pressure on the index, with the sector off 0.5 per cent.

“The economic data across the western world is so contradictory still,” Jim Wood-Smith, head of research at Williams de Broe, said.

“There’s not enough bad news to persuade the bulls that the double-dip is going to come, and there’s not enough good news to persuade the bears that 2011 is going to be any better, so we’re stuck in limbo at the moment.”

Britain’s economy grew at its fastest pace in nine years in the second quarter of 2010 and first-quarter growth was revised slightly higher, the Office for National Statistics said.

And British retail sales rose much more than expected – at their fastest pace in over six years – in September, a survey by the Confederation of British Industry showed.

The Bank of England should start pumping more money into the economy in order to prevent Britain falling into the same kind of slump Japan did in the 1990s, Monetary Policy Committee member Adam Posen said.

Hedge fund firm Man Group was a heavy loser, shedding 2.4 per cent after it said clients had pulled out assets for an eighth straight quarter.