Global markets rally

A strong opening on America’s benchmark share index helped secure gains on the FTSE 100 Index today as global markets rallied higher.

The Dow Jones Industrial Average leapt around 1.3% soon after opening amid worldwide optimism after China announced plans to loosen its currency’s two-year peg to the US dollar.

Mining stocks were the biggest beneficiary in London, driving the Footsie up 53.2 points to 5304.1.

Wall Street in particular welcomed the move, which could provide a boost to US manufacturers and exporters to China.

Asian markets had already set the pace for the day’s trading session, with the Hang Seng closing 3% higher in Hong Kong and Japan’s Nikkei index up 2% after Beijing’s surprise proposal to determine its exchange rate from multiple currencies.

The yuan has been pegged to the US dollar since the global financial crisis took hold in 2008, causing friction with countries who say it is undervalued for China’s own benefit.

The move raised expectations of a boost to crude imports by China, causing oil prices to rise by more than 1% to around $78 a barrel.

This was positive news for Royal Dutch Shell, which climbed 33.5p to 1784.5p, but BP continued to struggle after it emerged the beleaguered oil giant planned to raise $50bn (€40bn) to cover the cost of the Gulf of Mexico oil spill. On the day that BP’s first quarter dividend should have been paid to shareholders, the stock slipped another 4%, or 12.35p to 345.1p.

With investors treating the China currency move as a sign of increased confidence in the country’s economy, mining stocks dominated the risers board with Vedanta Resources up 6% or 142p to 2473p and Rio Tinto 172p higher at 3497p.

The flight to risk meant utility stocks was out of favour, with United Utilities down 9p at 530p and Severn Trent off 14p at 1228p.

Marks & Spencer’s strong run of recent sessions also came to an end following a drop of 6.7p to 344.9p. B&Q owner Kingfisher dropped 0.9p to 228.9p.

Elsewhere, shares in Supernanny television producer Shed Media were 6% higher, up 4.5p at 82.5p, after it confirmed it was the subject of takeover interest from US media giant Time Warner.

Shed revealed two weeks ago that previous suitors Bowmark Capital and Darwin Private Equity had walked away from backing a management buyout, but said it had received another approach.

It is understood Time Warner – the group behind blockbusters such as 'Sex and the City' – wants to add Shed to a recently formed London-based production unit.