FTSE growth continues on more flexible yuan and miner gains

The UK’s blue-chip index is posting a gain of more than one per cent in the opening hours of the first session for the week after China’s central bank said late on Saturday it was prepared to make the yuan more flexible due to the global economic recovery. The news has encouraged investors to begin reconsidering riskier assets and improved the demand outlook for commodities, pushing mining and commodity stocks higher this morning.

Kate Neilson
shareprices.com - Monday, June 21, 2010

Printable version email to a friend Subscribe to shareprices.com newsfeed
Mining stocks are the biggest gainers in today's session

At 10:00 BST, the FTSE 100 index has gained a solid 59 points to hit 5250.84 - up 1.12 per cent - with the mining sector dominating the gains for the UK’s top index.

Chinese authorities announced at the weekend that it planned to make the exchange rate more flexible and keep the yuan ‘stable’ with no immediate revaluation of the currency. Asian stocks gained as a whole on the back of the reports as metal prices firmed and crude rose to the $79 mark per barrel with investors growing in confidence about China’s role in the economic recovery. And reaction has been very similar on the FTSE 100 with investors eyeing riskier mining shares in particular.

The FTSE 100 risers is dominated by mining groups at the peak of the listing with Vedanta Resources (LON:VED) heading the onslaught with a 153p gain, up 6.6 per cent. Rio Tinto (LON:RIO) is following closely with a gain in excess of five per cent and Xstrata (LON:XTA), BHP Bilton (LON:BLT), Kazakhmys (LON:KAZ), Antofagasta (LON:ANTO) and Fresnillo (LON:FRES) stock is all up between three and four per cent.

Commodity stocks including Petrofac Ltd (LON:PFC), which is 3.4 per cent up, and Tullow Oil (LON:TLW), Cairn Energy (LON:CNE) and Royal Dutch Shell (LON:RDSA) are also amongst the top climbers. BP (LON:BP) however is at the opposite end of the scale, shedding almost 18p to drop five per cent down after investors feared more economic expense for the oil giant after the reports that twice as much oil could be pumping into the Gulf of Mexico than initially predicted.

With a stronger outlook for economic recovery and investors gaining an appetite for risk assets again, the banking sector is also in positive territory. Barclays (LON:BARC) and HSBC (LON:HSBA) are the biggest gainers, up 1.5 per cent. Part nationalised banks, Lloyds Banking Group (LON:LLOY) and RBS (LON:RBS) aren’t sharing in the same success though, up 0.4 per cent and down 0.4 per cent respectively. The reason for the restrictions and hesitations on banking stock could be investor concerns surrounding tomorrow’s emergency budget announcement from the coalition government – analysts have predicted George Osborne will deliver the tightest budget for 30 years.

 

Latest News

Related News

FTSE 100 Latest

ValueChange
5,266.41136.87  % fall