London's FTSE 100 Finishes Sharply Higher in Broad Based Rally

by: Proactive Investor

London`s FTSE 100 rose 1.4% yesterday to reach 5,300 on positive news from China, whose PMI [purchasing managers index] showed expansion of the manufacturing sector for the first time in four months. On top of that, Australia’s Q2 GDP grew at the fastest pace in three years, rising 1.2%.

Tour company TUI Travel [LON:TT] emerged atop the leader board with a 6% gain, while telecom company Cable & Wireless [LON:CW] added 5.5%.

Base metal miners Kazakhmys [LON:KAZ] and Xstrata (OTC:XSRAF) [LON:XTA] followed, tacking on 3.8% and 3.3% respectively.

Hospitality company Whitbread [LON:WTB], silver miner Fresnillo [LON:FRES], base metal miner Antofagasta (ANFGF.PK) [LON:ANTO] and commercial property company Land Securities [LON:LAND] added just over 3%.

No FTSE 100 constituent lost 1% or more yesterday.

Oil rebounds after China data

Oil prices were on the comeback trail yesterday after an update on Chinese manufacturing from the Federation of Logistics and Purchasing came in better than expected, showing an increase from 51.2 to 51.7 in the country’s PMI [purchasing managers index] in August.

The manufacturing data calmed fears that the economic growth in China is stalling in view of the government’s monetary policy tightening moves, which would lead to lower fuel demand from the world’s second largest energy consumer.

October Brent Crude rose to US$75.32/barrel, while US light, sweet crude for October delivery climbed to US$72.63/barrel.

Blue chip oil and gas producers were on the rise yesterday. Supermajor BP (NYSE:BP) [LON:BP], which announced that it had agreed a US$363m deal to sell its interests in two Malaysian petrochemical businesses to Malaysia’s state-owned oil company PETRONAS, advanced 1.1%.

Gold reaches $1,255

Gold's move to US$1,254/oz during European trading boosted mining precious metal stocks, while silver and platinum rallied to US$19.45/oz and US$1,530/oz respectively.

Major mining stocks were in demand yesterday as a result. Silver miner Fresnillo [LON:FRES] added more than 3%, Platinum miner Lonmin [LON:LMI] and gold producer Randgold Resources [LON:RRS] climbed 2.5% and 1% respectively.

Base metals rise to bolster miners

Copper and nickel climbed to US$3.38/lb and US$9.41/lb, while zinc rose to US$0.933/lb.

Major base metal miners did well yesterday. Kazakhmys [LON:KAZ] and Xstrata [LON:XTA] led the sector with gains of 3.8% and 3.3%. Antofagasta [LON:ANTO] and Rio Tinto (RTP) [LON:RIO] added 3%, while Anglo American [LON:AAL] and Vedanta Resources [LON:VED] advanced 2.5%. Eurasian Natural Resources [LON:ENRC] and BHP Billiton (NYSE:BHP) [LON:BLT] followed with gains of 2% and 1.7% respectively.

Financial deliver solid gains

Financial stocks generally moved with the markets. Standard Chartered (OTCPK:SCBFF) [LON:STAN] led the banks, rising 2.3%. Barclays (BCSY) [LON:BARC] and Royal Bank of Scotland [LON:RBS] added 1.9% and 1.5%, while Lloyds (NYSE:LYG) [LON:LLOY] posted a small gain. HSBC (HBC) [LON:HSBA] bucked the trend, sliding just below the opening level.

Standard Life [LON:SL] was the top riser in the insurance sector with a 2.1% advance. and Admiral Group [LON:ADM]Old Mutual [LON:OML] added 1.8% and 1.6% respectively. Aviva (NYSE:AV) [LON:AV] and Prudential [LON:PRU] tacked on just over 1%.

Disclosure: No position