Miners carry the FTSE to small gains after talk Australia could axe new tax
ARALLY by miners lifted Britain’s top share index by the close on Thursday, while improved economic sentiment gave the banks a boost.
Another sharp fall for BP, however, limited the index’s gains, as the costs of the disastrous oil spill in the Gulf of Mexico continued to cloud the company’s future.
Miners delivered the bulk of the rally, extending gains after the Herald Sun newspaper said the Australian government would soon announce major changes to a controversial mining tax that has weighed on the sector.
Rio Tinto, Xstrata, Kazakhmys and Eurasian Natural Resources added 3.4 to 4.5 per cent.
Miners were also supported by positive economic data from China, where robust growth in May exports and imports testified to the underlying momentum of the world’s third-largest economy.
The FTSE 100 ended up 46.64 points, or 0.9 per cent, at 5,132.5, having broken a three-day losing streak on Wednesday.
However, investors were still cautious, with the blue-chip index nursing 11.9 per cent losses since Europe’s debt crisis escalated in mid April.
“There are any number of problems that could reappear, and credit markets are still not running smoothly,” said Tim Whitehead, investment manager at Redmayne-Bentley in Leeds.
“It will be hard to make much headway above 5,200 over the summer, and I wouldn’t be surprised if we test 5,000 again.”
But there was enough optimism to lift cyclical stocks such as banks. Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered were up 0.5 to 4.6 per cent.