Mining stock rebounds on Chinese export growth

A rebound for mining stock has seen the FTSE 100 open fairly strongly this morning with the UK’s blue-chip index looking to end three consecutive sessions of loss. The sector has been boosted by news from China that exports have jumped 50 per cent in May compared to the numbers for the same period a year ago, relieving investor concerns about weak demand for commodities.

Kate Neilson
shareprices.com - Wednesday, June 09, 2010

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Mining stock has rebounded this morning on Chinese export growth

The news from China has meant investor confidence that earnings growth won’t be derailed by Europe’s debt problems has been boosted. Exports from China grew by approximately a half compared to May 2009 and new loans were 630bn Yuan (£64bn) according to a report from Reuters. The export growth has persuaded investors to recommit to mining stock, which is the FTSE’s best performing sector this morning.

The majority of the mining stock is in gaining territory in the opening couple of hours of trading after investors reacted quickly to the news to pounce of the low prices caused by the FTSE’s three-day decline. Kazakhmys (LON:KAZ) is the standout stock in the sector, heading the FTSE 100 risers charts with a 1.5 per cent gain at 10:00BST. Xstrata (LON:XTA) is also gaining with an increase of one per cent at 10:00BST after improving by 3.3 per cent at times this morning. And it’s a similar sequence of news for the rest of the sector with BHP Bilton (LON:BLT) and Rio Tinto (LON:RIO) up 0.6 per cent and 0.2 per cent respectively at the moment after both group’s gained 2.6 per cent on their share price earlier in the session.

As well as miners getting bolstering reports this morning, banking stock has also reaped some benefits from quotes in today’s press from the Chairman of the US Federal Reserve, Ben Bernanke. The veteran central banker said at a dinner in Washington DC that the US economy will not suffer a ‘double-dip’ recession. Bernanke said the world’s largest economy would experience “a continued recovery” boosted by “good momentum in consumer spending and investment”. The report has helped encourage investment on the FTSE on a wider scale, but will also come as calming words to banks that are still hurting from eurozone debt fears. At 10:00BST, Royal Bank of Scotland (LON:RBS) and Lloyds Banking Group (LON:LLOY) are heading the sector with a share price growth between 1.4 per cent and 1.3 per cent. More investor movement has been predicted for RBS in the near future as the group prepares to sell its Sempra gas and power trading operation for £4bn.

The two main stocks responsible for dragging the FTSE down this morning are BP (LON:BP) and Cable & Wireless Worldwide (LON:CW). BP shares continue to dive as the group keeps up its operation to contain oil spilling from its deep sea well in the Gulf of Mexico with CEO Tony Hayward having to testify before the Committee of Energy and Commerce in the US next week. The shares are down 2.7 per cent at 10:00BST.

Cable & Wireless Worldwide has had a sell note issued on it by Evolution Securities after the group, which demerged into Cable & Wireless Worldwide and Cable & Wireless Communications in March, has gone ex-dividend. Cable & Wireless Worldwide is 2.8 per cent down at 10:00BST with the Communications arm also heading the FTSE 250 fallers charts too.

At 10:00BST the FTSE 100 index is down 6p to 5022.34, a loss of 0.1 per cent and teetering the index just above the 5000 point marker.

 

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