FTSE bounces back over 6,000
THE FTSE 100 soared back above the 6,000- point barrier yesterday as a vote of confidence from its lenders for Glencore and hopes for further stimulus measures in China sparked a mining sector revival.
About £ 40billion was added to the value of Britain’s blue chips – the FTSE closed up 168 points to 6030 – with shares in mining and commodities trader Glencore jumping 16 per cent as it allayed concerns that bank finance had dried up in the face of plunging metals prices.
Glencore, led by chief executive Ivan Glasenberg, pictured, signed new loan commitments to replace an existing £ 6billion credit facility after receiving nearly £ 2billion of additional commitments from its 37 main lenders.
It has faced down concerns over its fi nancial health despite being forced to dispose of assets and sell new shares to raise funds, as well as scrapping its dividend in order to reduce its £ 20billion debt pile.
Earlier this month, ratings agency Standard & Poor’s cut the company’s credit rating to the lowest investment grade after reducing its commodity price forecasts.
Broker Investec hailed “a positive development” for Glencore, adding: “While not finalised, it is encouraging that there remains healthy demand to lend to Glencore. However, we would be surprised if the interest payments will be reduced as the commodity environment has worsened and the company’s credit rating is weaker than a year ago.”
Analysts at Shore Capital said: “Glencore’s decisive actions in response to falling commodity prices appear to be paying off.”
Glencore’s shares rose 17p to 120p, but its performance was eclipsed by fellow miner Anglo American’s 70p rise to 468p, which was achieved despite its debt being downgraded to “junk” status by ratings agency Fitch.
Anglo has flagged the potential sale of billions of pounds of assets as it looks to exit coal and iron ore to focus on diamonds, platinum and copper. Fitch has raised concerns over the company’s restructuring amid uncertainty over the prices it could fetch from the disposals.
Analysts said investors had also been encouraged by an agreement between Saudi Arabia and Russia not to raise oil production further, which could help stem the rate of asset sales by oil- rich sovereign wealth funds. Crude prices rallied by about 7 per cent yesterday.