Glencore Leads Rally in Miners as China Cuts Interest Rates

Operations At Copper Smelting And Refinery Aurubis AG

China consumes about 40 percent of the world’s copper and half its aluminum.

Photographer: Krisztian Bocsi/Bloomberg
  • Glencore gains as much as 9.3% in London, most in two weeks
  • Metals prices also extend advance; China is biggest user

Glencore Plc led a rally among mining companies after China cut interest rates to bolster the economy of the world’s biggest user of commodities.

Glencore jumped as much as 9.3 percent in London, its biggest advance in two weeks, after the People’s Bank of China said it will reduce its benchmark lending rate and reserve requirements for banks. The 13-member FTSE 350 Mining Index climbed 4 percent and industrial metals extended gains.

Mining companies including Glencore have been forced to scale back production of higher-cost operations after slowing demand in China sent prices of some metals to the lowest in at least five years. The country, which consumes about 40 percent of the world’s copper and half its aluminum, is projected to grow at the slowest pace in a quarter of a century.

“China consumes most of the world’s commodities, so an accommodative monetary policy has to be positive for mining stocks," Sibonginkosi Nyanga, an analyst at Imara S.P. Reid (Pty) Ltd., said by phone from Johannesburg.

Glencore was 7 percent higher at 125.25 pence by 1:30 p.m. in London. The shares, which were earlier halted due to volatility, have dropped 58 percent this year for the worst performance in the U.K.’s benchmark stock index. BHP Billiton Ltd., the largest miner, gained 3.2 percent and Rio Tinto Group added 2.9 percent.

Glencore, which is seeking to cut its $30 billion debt load by a third, has almost doubled since touching a record low last month as it rebutted concerns about its ability to repay the debt. Ivan Glasenberg, the billionaire chief executive officer of the commodity trader and miner, has said no one can read the Chinese commodity market.

China’s one-year lending rate will drop to 4.35 percent from 4.6 percent effective Saturday, the central bank said on its website on Friday. The one-year deposit rate will fall to 1.5 percent from 1.75 percent.

Metals climbed, with copper adding 0.3 percent on the London Metal Exchange. Aluminum advanced 1.4 percent, rebounding from the lowest in six years. Gold rose 1 percent in London, according to Bloomberg generic pricing. China vies with India as the largest bullion buyer.

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