Footsie hits a 2016 high as miners lead fightback
THE FTSE 100 index closed at its highest level of the year so far after clawing back all the losses made in a ghastly opening few weeks.
Britain’s blue-chip index crashed 11.3pc in the first six weeks of 2016 – taking it down towards 5500, its lowest level for nearly four years.
But it has rallied strongly since and gained another 97.27 points yesterday to close at 6203.17 – its highest level of the year.
The rise was driven by a strong performance from the mining sector.
The Grand Old Duke of York appears to be marshalling the movements of mining giants this week, as they marched back up to the top of the hill, reversing Tuesday’s heavy losses.
In this case, the Grand Old Duke of York bore a strong resemblance to Janet Yellen, the chair of the Federal Reserve. She indicated the US central bank should be in no hurry to hike interest rates this year, which hit the US dollar. Minerals, which are priced in the US currency, became cheaper, sparking demand for mining stocks.
Anglo American closed up 56.6p or 11.8pc at 535.7p, Rio Tinto rose 110p or 5.9pc to 1973p, and BHP
Billiton was 43.6p or 5.8pc higher at 793.6p.
Oil giant Royal Dutch Shell has been caught up in a corruption probe relating to the purchase of an oil block off the Nigerian coast five years ago.
Italian prosecutors are now investigating Shell following a search of its headquarters in The Hague in February by Dutch prosecutors.
Two years ago a court in Milan placed oil firm Eni under investigation over the £900m purchase of Nigeria’s OPL-245 offshore oil block. Eni bought the block in a joint venture with Shell. Prosecutors widened their investigation to include Eni’s chief executive Claudio Descalzi.
Eni and Descalzi have denied any wrongdoing. Eni said it always dealt with the government of Nigeria, paid fees into a government account and did not use intermediaries for the transaction.
A spokesman for Shell said: ‘Shell is co-operating with the authorities and is looking into the allegations, which it takes seriously.’ Shell’s shares rose 2.8pc or 46.5p to 1714p.
Fashion firm Next was one of a handful of blue- chips to l ose ground, shedding 75p at 5560p, despite broker Jefferies upgrading the retailer to ‘hold’ from ‘underperform’, even as it slashed its price target to 5100p from 6750p.
The broker revealed the results of its February retail review, and the omens are not good, with the broker claiming that rising fears of unemployment could hit consumer sentiment.
As a result it downgraded Debenhams, Dunelm, and Marks & Spencer from ‘buy’ to ‘hold’, saying the only bright spot on the horizon for the sector could be the British weather, which may be a bit more cooperative this year than it was in 2015.
When you are relying on the British weather for good news, you know you are in trouble.
Car insurer Admiral drove 44p or
2.3pc higher to 1969p, with rumours swirling around that it may have to repel boarders, though the rumour spreaders declined to indicate who the bidder might be.
Among the small caps, North Sea operator Independent Oil & Gas confirmed it is in talks with its partner Alpha Petroleum Resources to buy the half of the Blythe discovery that it does not already own.
The confirmation came after the company revealed a £13.55m cash infusion from London Oil & Gas which saw the shares race 10.8pc higher to 11.5p.
Vast Resources, the resource development and production company, was living up to its name as it unveiled a more than 20- f old increase in the total prospecting licence area at its Manaila polymetallic mine in Romania.
The shares jumped 22.2pc to 0.275p as the company said the extension of the licence area offers the opportunity to increase its resource base at the mine. The news was less good for Kolar
Gold, the India-focused gold exploration company, which revealed a half-year loss of £533,065, little changed from the year before.