Footsie rises as gains in mining stock outweigh sharp fall in Sainsbury

FTSE:5,795.88 (+33.17) Mid 250: 11,447.35 (+5.78) Small Cap:3,205.21 (+32.30)

UK STOCKS rose yesterday, led by a rally in mining companies, as base metals advanced and minutes from the Bank of England’s last meeting eased speculation of an imminent interest-rate increase.

The FTSE 100 Index gained 0.6 per cent to 5,795.88 at the close in London after swinging between gains and losses at least 15 times yesterday. The FTSE All-Share Index rose 0.5 per cent.

“Mining companies have kept indices afloat today with traders bulled by rising commodity prices,” said Joshua Raymond, a London-based market strategist at City Index.

“The minutes also gave traders an excuse to buy stocks,” he said.

Minutes from the Bank of England’s March 10th meeting showed the bank saw “merit in waiting” to examine the effect of higher oil prices on inflation.

Policy makers voted 6-3 to keep interest rates on hold this month.

Xstrata, the world’s fourth-largest copper producer, climbed 3.5 per cent to 1,422.5p as copper advanced for a second day in London on expectations that demand will improve.

Kazakhmys, Kazakhstan’s largest copper miner, jumped 4.5 per cent to 1,431p, while Rio Tinto added 2.9 per cent to 4,128p. Antofagasta, owner of copper mines in Chile, increased 2.8 per cent to 1,391p.

Three-month-delivery of copper on the London Metal Exchange rose 2.6 per cent to $9,740 a metric ton.

Eurasian Natural Resources, a Kazakh ferroalloy producer, rallied 3.5 per cent to 929.5p after profit more than doubled to $2.19 billion in 2010 as prices increased.

Premier Oil, a UK-based oil and natural gas explorer, dropped 4 per cent to 1,911p.

Enquest, an explorer in the North Sea, sank 13 per cent to 137.6p and Nautical Petroleum tumbled 10 per cent to 399.75p.

Scottish and Southern Energy fell 2 per cent to 1,207p, Drax lost 4.3 per cent to 392.2p and Centrica dropped 2.6 per cent to 317.6p.

Sainsbury slumped 5.4 per cent to 335.3p, the biggest decline since June 2009.

ITV declined 5.1 per cent to 80.35p after Jefferies downgraded the UK’s biggest commercial broadcaster to “underperform” from “hold”, citing “dire” consumer confidence numbers plus potential margin squeeze from commodity price inflation in the retail sector. – (Bloomberg)