FTSE higher as miners rally; oils, banks fall

By Jon Hopkins

LONDON (BestGrowthStock) – Britain’s top share index moved higher in choppy early trade on Thursday, recovering from an opening plunge, as a rally by miners and some positive corporate news offset further weakness in banks on euro zone debt fears.

By 0820 GMT, the FTSE 100 (.FTSE: ) index was up 19.92 points, or 0.4 percent at 5,361.85, recovering after an opening plunge to a low of 5,267.50. That was just above a support level of 5,259 highlighted by a Charles Stanley technical analyst on Wednesday.

The blue chip index dropped 69.18 points, or 1.3 percent on Wednesday, taking the four session decline to almost 5 percent.

“Investors have chosen to set aside euro zone debts crisis concerns and focus on some positive corporate news and the possibility of an outright winner in the British election,” said Mic Mills, senior trader at ETX Capital.

“But overall sentiment is very fragile and any further shock would easily drive us back through some key support levels.”

Miners were the biggest blue chip gainers, rallying following recent falls after Australia imposed a super tax on the sector, helped by a recovery from metal prices.

Rio Tinto (RIO.L: ), BHP Billiton (BLT.L: ), Xstrata (XYTA.L: ), Vedata Resources (VED.L: ), Lonmin (LMI.L: ), and Fresnillo (FRES.L: ) gained 0.6 to 1.9 percent.

Fresnillo was also supported by suggestions in newspaper market reports that Mexican billionaire Carlos Slim could be contemplating a bid for the silver miner.

A big batch of corporate news also created a number of blue chip gainers. Insurer RSA Insurance (RSA.L: ) took on 2.1 percent after it said in a trading update that net written premiums rose 5 percent in the first quarter and confirmed key growth and profitability targets for 2010.

Peer Prudential (PRU.L: ) rallied 2.4 percent after falls on Wednesday following news of a delay to the rights issue linked to the insurer’s purchase of AIG’s (AIG.N: ) Asian operations.

Fund manager Schroders (SDR.L: ) saw good support, up 1.8 percent as it posted a sharp rise in first-quarter pretax profit helped by strong institutional flows.

And beverage can maker Rexam (REX.L: ) added 2.2 percent as it reported above-forecast first-quarter results.

But not all the corporate news was well-received, with WM Morrision (MRW.L: ) a big faller, down 2.2 percent as Britain’s No. 4 grocer posted a sharp drop in underlying quarterly sales growth.

Fellow food retailers J Sainsbury (SBRY.L: ) and Tesco (TSCO.L: ) shed 0.9 and 0.8 percent respectively.


Banks stayed under pressure on the euro zone debt crisis concerns, with Royal Bank of Scotland (RBS.L: ), Barclays (BARC.L: ), Lloyds Banking Group (LLOY.L: ), and Lloyds Banking Group (LLOY.L: ) shedding 0.3 to 1.5 percent.

But global bank HSBC (HSBA.L: ) rallied 0.3 percent higher.

Integrated oils were mixed as crude slipped below $80 a barrel, with Royal Dutch Shell (RDSa.L: ) and BG Group (BG.L: ) falling 0.4 and 0.6 percent, respectively

But peer BP (BP.L: ) gained 1.0 percent, extending Wednesday’s recovery following sharp recent falls on fears over the costs of an oil spill in the Gulf of Mexico.

On the macro front, British service sector PMI actively unexpectedly slowed in April, with the headline MPI index falling to 55.3, down from 56.5 in March, and below the consensus forecast of 57.0.

Voting has started in the British general election, with overnight opinion polls showing the Conservative lead firming, leaving it a close call as to whether they will win an overall parliamentary majority.

The Bank of England has moved its normal monthly rate announcement to next Monday to avoid clashing with the election.

The European Central Bank holds its monthly meeting later on Thursday and, while it is expected to keep rates unchanged at 1 percent, it is likely to try to assure markets that it can prevent the Greek debt crisis spreading.

Stock Investing

(Editing by Hans Peters)

FTSE higher as miners rally; oils, banks fall