24th Sep 2014 16:15
LONDON (Alliance News) - The UK leading stock index rallied to a higher close Wednesday, supported by strong interest in the mining stocks at the end of a subdued trading session that saw investors trade with a slightly defensive bias amid the extended military action against Islamic militants being committed to by the US and its allies.
The mining sector provided the main support for the second consecutive day following the better-than-expected Chinese PMI data on Tuesday and amid some positive individual company news. Meanwhile a number of stocks going ex-dividend accounted for some of the worst performers.
After trading near to flat for most of the day, the FTSE 100 rallied into the close to finish up 0.5% at 6,706.27. The FTSE 250 closed just fractionally higher at 15,537.61, while the AIM All-Share closed down 0.3% at 753.57,
Major European markets had a more positive day, with the French CAC 40 gaining 1.3%, and the German DAX gaining 0.7%.
The gains in Europe come despite the German IFO business climate survey falling more than expected to 104.7 in September. Economists had forecast the indicator to drop to 105.8 from 106.3 in August. The reading marks the fifth straight month of falls for the survey.
European Central Bank President Mario Draghi did his best reassure eurozone businesses Wednesday, however, reiterating his recent message during an interview on Europe 1 radio that, "Monetary policy will stay accommodative for a long time and I can say that the Governing Council is unanimous in its commitment to use the available instruments within its mandate to bring inflation back to close but below 2%."
After the European market close, US stocks continue to trade higher, with the DJIA up 0.5%, the S&P 500 up 0.5%, and the Nasdaq Composite up 0.7%.
US President Barack Obama chaired a special meeting of the UN security council on Wednesday, which is reportedly only the second time a US president has taken such a step. Obama called for a more collective approach to the threat of the spread of Islamic militants. The plea comes as the US stepped up its air strikes in Iraq and Syria, in what could turn out to be a lengthy operation.
London's defensive sectors saw some buying interest Wednesday, with the FTSE 350 Electricity sector up 1.4%, the FTSE 350 Beverages sector up 1.0%, and the FTSE 350 Tobacco sector up 0.7%.
United Utilities gained 0.9% after the water company said it is currently trading in line with internal expectations for the six months ending September 30, while it remains confident of delivering its 2010-15 regulatory outperformance targets.
The Mining stocks also outperformed the London market, with BHP Billiton closing as the best performing FSTE 100 stock. The miner rallied towards the end of the day after it said it is assessing a London listing for the new company that will be created through a demerger of a number of its assets, following "extensive" discussions with shareholders. The stock closed up 3.2%. Fresnillo was amongst the top blue chip index gainers, closing up 2.2%, after being added to a "most preferred" list by analyst at UBS.
Kazakhmys closed up 1.9% after the metals miner said it has awarded the contract to build a sulphide concentrator at Aktogay - the company's second major copper growth project - to Non Ferrous China, allowing it to firm up the expected total capital cost of the project.
Centrica was the worst blue-chip performer, closing down 2.2% after going ex-dividend. In the FTSE 250, Alent and Premier Farnell underperformed, down 2.3% and 2.9% respectively after also going ex-div.
Rightmove took a hit after receiving a double downgrade to Sell from Buy by Citigroup. Citi cut its price target by 40% ahead of the January launch of the new property search site Agents' Mutual. Citi also initiated coverage on sector peer Zoopla with a Neutral rating as it sees the easy gains in the sector coming to an end as the space gets more crowded. Rightmove was the biggest faller in the FTSE 250, closing down 2.9%, while Zoopla fell 2.2%.
Thursday brings scheduled updates from Gulfsands Petrolium, Haynes Publishing, Mitchells & Butlers, and DJI Holdings. US durable goods orders provide the economic highlight, while UK investors will also have an eye on Mark Carney at 1340 BST, when the Bank of England governor talks from Wales.
By Jon Darby; [email protected]; @jondarby100
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