Further pain for miners fails to hold back gains for FTSE 100
MINING was one of the few sectors to sink yesterday as a rising tide across Europe’s blue-chip markets failed to lift the sector. Slumping iron ore prices combined with concerns triggered by BHP’S worse than expected results this week sent shares in some of the sector’s biggest names lower.
The fatal collapse in January of a Brazilian dam owned by Vale, the world’s largest iron ore miner, led to supply restrictions that boosted prices during the first half of the year. However, a rout this month has eroded much of those gains, putting pressure on producers.
Growing shipments and stockpiles along with fears of a global economic slowdown, exacerbated by the escalation of the Us-china trade war, have hurt miners. They have a disproportionate weighting on the benchmark FTSE 100 index due to their size.
BHP said this week that slowing growth in China and threats to free trade posed significant risk to prices of raw materials for the next year. Shares in BHP, which began the year at £16.31 and traded as high as £20.49 in July fell 21p, or 1.2pc, to £17.14.
Fellow FTSE 100 miner
Rio Tinto shed 19.5p, or 0.5pc, to £39.90, while
Evraz was off 0.6p to 492.4p.
Despite the miners’
troubles, UK shares joined Europe’s major indices in gaining ground as investors on the continent were encouraged by the prospect of Italian president Sergio Mattarella brokering successful talks over a new coalition after the country’s far-right government collapsed on Tuesday.
Forming a new coalition would avoid the need for immediate snap elections, which could delay a budget and add to uncertainty.
Italy’s FTSE MIB index led the way in Europe, rising 1.8pc. France’s Cac 40 added 1.7pc, while Germany’s Dax rose 1.3pc. In the UK, the FTSE 100 index jumped 1.1pc to close at 7,204 points as only 11 of its constituents lost ground. The mid-cap FTSE 250 ended at 19,208 points, up just over 1pc.
Tullow Oil surged after analysts at Canaccord Genuity upgraded it to a “buy” rating and raised their target price by 20p to 280p, saying that the success of its exploration at the Jethro-1 well in Guyana in South America this month had come at the best possible time and would help the company to shrug off its difficulties in east Africa. Shares rose 8.9p, or 4.3pc, to 215.6p.
The pound ceded ground to both the dollar and the euro on rising expectations of a no-deal Brexit as Boris Johnson prepared to meet with German chancellor Angela Merkel and French president Emmanuel Macron. Sterling fell as low as $1.211 against the dollar and €1.091 against the single currency.