Mining groups push market up as Lloyds falls – London Report
Britain’s top share index nudged higher yesterday, thanks to gains in major mining companies, but it was held back by falls in Lloyds and pharmaceuticals company Hikma.
The FTSE 100 index gave up early gains to trade up 8.38 points, or 0.1 per cent higher, at 6,968.87 by the close.
The index hit a high of 7,015.49 points early in the day, nearing its record peak of 7,122.74 points reached in late April. The FTSE 100 is up by around seven per cent this year.
Jordanian company Hikma was the biggest loser, sliding 1.4 per cent, after its founder, who was also a major shareholder, died on Friday.
Lloyds also fell one per cent, after the bank was downgraded to “sell” from “hold” by Investec.
However, out of 26 analysts with a rating on Lloyds, only three have a “sell” rating, according to Thomson Reuters data. Shares in the bank are up over 13 per cent this month.
“They’ve had a really strong rally this year, and I’ve been expecting them to pause,” Zeg Choudhry, managing director of LONTRAD, said. “However, there are not many with a ‘sell’ rating on the stock … the general trend for the stock is higher.”
Among risers, BHP Billiton reversed early losses and traded up 2.4 per cent, after a weak debut by its spin-off, South32, in Sydney. News that the new firm would not be included in FTSE indices led some fund managers to take money out of South32 and put it into BHP, traders said.
Gold and silver miner Fresnillo advanced by 5.4 per cent to 790p, the top riser, after saying that its 2018 silver production target remained in place.
“Precious metals were out of favour in 2014, with silver prices falling around 20 per cent, but look to be stabilising,” Brenda Kelly, head analyst at London Capital Group, said in a note.
“Shares in Fresnillo are now trading at six-week highs and could pursue a move towards 800p should metal prices continue to rebound.”
Material-related companies added four points to the index, with the FTSE 350 Mining Index rising 0.8 per cent.
Engineering company Weir also gained two per cent, after US bank Citigroup upgraded its rating on the stock to “buy” from “neutral”.
Among mid-cap stocks, engineering software group Aveva jumped nine per cent on bid speculation. Satellite company Inmarsat fell 2.9 per cent on a delay in the launch of its third Global Xpress satellite.