Strong resource stocks overshadow poor US data from previous session

Poor job data in the US released on Friday was overlooked today as the FTSE 100 clawed back above the 5,400 marker with strong drives by mining and insurance stocks and further merger talks between International Power (LON:IPR) and French giant GDF Suez.

Rob Hull
shareprices.com - Monday, August 09, 2010

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An International Power power station in Sicily, Italy

International Power, one of the UK’s biggest electricity generators, maintained a strong presence in newspapers over the weekend with further reports of an asset-sharing deal with the French firm. GDF Suez would take control of the UK-listed company, which has stakes in 45 power stations in over twenty different countries, if the deal goes through. The ongoing speculation has increased interest in the stock, pumping it over 13p higher – a gain of over 3.5 per cent.

Higher metal prices have also encouraged more action in the mining sector. Mining stocks were also boosted by the weak job reports from the US in the previous session which meant a slide in the dollar with further Federal Reserve easing expected to counteract the results.

The top mining shares were Lonmin (LON:LMI) which has been grounded at the bottom of the sector in recent sessions. A report from the Daily Mail that said Xstrata (LON:XTA) was eyeing the stock to mount another takeover bid pushed the share price over 3.5 per cent higher this morning.

Kazakhmys (LON:KAZ), Antofagasta (LON:ANTO) and Rio Tinto (LON:RIO) are all also exceeding two per cent gains at the moment, capitalising on improved metal prices.

Oil stocks also continued good form from the previous week with BP (LON:BP) shares maintaining a strong interest after the group said the recent measures to stop the oil leaking from the deep sea well in the Gulf of Mexico is working. The shares climbed 2.5 per cent to over 435p.

Banking stocks remained in demand after a collection of very strong and confidence-inspiring results in the last five sessions. Barclays (LON:BARC) leads the way with gains of three per cent and both Lloyds Banking Group (LON:LLOY) and HSBC Holdings (LON:HSBA) are gaining in the region of 1.5 per cent. Royal Bank of Scotland (LON:RBS) is 0.2 per cent down however following reports that an extension of the Special Liquidity Scheme (SLS) which provides cheap funding to part-nationalised banks Lloyds and RBS will not be extended beyond January 2011. If the extension is granted, both banks are likely to have to dispose of more assets, according to reports.

Like the banking sector, insurance stock continued to revel in the glory of strong interim reports announced last week. Aviva (LON:AV) is the standout stock, up over two per cent.

Just after 10:00BST, the FTSE 100 share index is 1.6 per cent higher with a gain of 85 points to 5,417.60.

 

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