Mining news spurs FTSE on

The London market clawed back lost ground today as major news in the mining sector from Rio Tinto spurred on stocks.

The FTSE 100 Index rose 59.9 points to 4446.8 in mid-morning trade after Rio announced it was scrapping its $19.5bn (€13.7bn) deal with China’s Chinalco in favour of a venture with rival BHP Billiton.

Shares in Rio and BHP leapt after the news, which will also see Rio launch a $15.2bn (€10.7bn) rights issue after shunning the Chinalco investment.

Heavily-weighted miners lifted across the board, accounting for eight of the top 10 FTSE risers.

Rio rose 11% or 304p to 3024p and its new joint venture partner – and former suitor – BHP lifted 8%, up 121p to 1577p.

The move to merge their Western Australia iron ore assets is expected to save the two firms some $10bn (€7.05bn).

Banks were also clawing back losses seen earlier this week, with Barclays ahead 3%, or 7.25p to 273.25p and Royal Bank of Scotland up 0.7p at 37.9p.

But Lloyds Banking Group slipped 0.1p at 67p. It is set for a bruising annual general meeting in Glasgow today and will also reveal take-up for its £4bn (€4.5bn) share placing on Monday in what will determine the level of State ownership.

In other corporate news, FTSE 250 firm Carphone Warehouse confirmed that its demerger will complete by next July.

But shares lost early rises to stand unchanged at 172.5p.

Housebuilder Bellway fell 3.5p to 654.5p despite announcing signs of a stabilisation in house prices and plans to start snapping up land again, on a selective basis.

Its warnings over the traditionally quiet summer period gave a more sober outlook after recent cheer from house price surveys.

Elsewhere, model toy firm Hornby rose 1p to 96p after news sales were being helped by the demise of Woolworths.