Mining firm pushes FTSE higher

A mining firm’s deal with one of the world’s biggest emerging economies helped the sector lead a bullish performance by the London market today.

Rio Tinto, Xstrata and Anglo American headed the FTSE 100 Index after Rio picked up a contract to supply iron ore to Chinese steel mills.

The news, plus falling oil prices and yesterday’s rally by tech stocks in the US, helped push the Footsie 22.5 points ahead to 4509.2 by lunchtime.

The Dow Jones Industrial Average closed last night at a two-month high as the cost of a barrel of US light crude oil eased to just over $37 (€30.40).

Electronics stocks chipped in with Micron, Texas, PMC Sierra and Advanced Micro dominating the agenda on the tech-heavy Nasdaq.

Although the Dow was being tipped to open slightly lower today, analysts said the US market looked underpinned.

In London, Rio Tinto was heading the Footsie with a rise of more than 3%, or 40p (60c) to 1320p (€19.70), after announcing its Chinese deal.

Industry counterparts Xstrata and Anglo American were hard on its heels, rising 17.5p (26.2c) to 713.5p (€10.70) and 28p (42c) to 1135p (€17) respectively. Another stock in the sector, BHP Billiton, was also making good progress, gaining 9p (10c) to 468.5p (€7).

Shell also rose sharply after it recruited Peter Voser from Swiss heavy engineering group ABB to be its new finance director.

Investors – unnerved by recent reserves downgrades – drove the share price 9.5p (14.2c) higher to 417.5p (€6.20).

Elsewhere on the corporate front, banking group HBOS was near the top of the Footsie fallers list as it revealed margin pressure and added that its share of the mortgage market was set to dip below 20% after tightening lending criteria in the light of higher interest rates.

HBOS shares dropped nearly 2% or 11.5p (17.2c) to 690p (€10.30), although the decline was still behind building materials group Hanson, which said higher pension costs would result in half-year figures missing expectations.

Shares in the aggregates group topped the Footsie losers, retreating 21.5p (32.1c) to 376.75p (€5.60).

In the FTSE 250, steelmaker Corus gave back earlier gains achieved after it said it expected interim operating profits to top £125m (€186.8m), compared with a £57m (€85.2m) loss last time. Shares were half a penny lower at 38.5p (57.5c).

Investors in newspaper publisher Trinity Mirror appeared unimpressed with a forecast of 5.1% growth in sales for the year to date, sending the stock 3.5p (5.2c) lower to 642.5p (9.60).