U.K. Stocks Advance on China Data, Trimming Weekly Drop
Randgold Resources Ltd. (RRS) led commodity producers higher amid signs of growing demand from the world’s second-biggest economy. BHP Billiton Ltd. (BHP) and Rio Tinto Group, the world’s largest mining companies, rallied more than 3 percent. Standard Life Plc (SL/) declined 3.3 percent as analysts raised concern about the insurer’s earnings.
The FTSE 100 gained 53.71 points, or 0.8 percent, to 6,583.39 at the close in London, paring the retreat this week to 1 percent. The gauge has rallied 9.2 percent from a low on June 24 as the U.S. Federal Reserve said it remains flexible on the pace of bond buying and the European Central Bank and the Bank of England signaled interest rates will remain low for an extended period. The broader FTSE All-Share Index added 0.7 percent today, while Ireland’s ISEQ Index (ISEQ) increased 0.9 percent.
“If the recent Chinese data can be moved into their GDP, confidence can come back,” Justin Harris, head of trading at Guardian Stockbrokers in London, said in a phone interview. “Mining stocks’ performance has been very weak this year and we expect them to gather pace into September. We are buying any weakness we get.”
China’s factory production increased 9.7 percent in July from a year earlier, the National Bureau of Statistics said today in Beijing. Retail sales advanced 13.2 percent while fixed-asset investment excluding rural households grew 20.1 percent in the first seven months of the year. Consumer prices rose 2.7 percent last month.
“It feels likes it has been a long time since markets have received a boost from Chinese data surprises,” Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a note. “The Chinese data flow has shown some tentative signs of stabilizing in the last month or so.”
China’s exports and imports rebounded by more than estimated last month, the General Administration of Customs said yesterday. The Shanghai Composite Index (SHCOMP) dropped 13 percent in the first half of the year on concern the Asian economy was slowing faster than expected. China is the world’s largest consumer of metals.
The FTSE All-Share Mining Index rose 3 percent. Randgold, a producer of the metal in Africa, advanced 6.8 percent to 4,722 pence. Fresnillo Plc (FRES), which operates silver and gold mines in Mexico, rallied 8.2 percent to 1,035 pence.
BHP Billiton climbed 3.4 percent to 1,963.5 pence and Rio Tinto surged 5 percent to 3,167.5 pence. The Standard & Poor’s GSCI Index (SPGSCI) of raw materials rose 0.9 percent at 5:07 p.m. in London, after five sessions of losses.
The Stoxx 600 Basic Resource Index, a gauge of mining shares in Europe, has fallen 15 percent this year, the worst performance among 19 industries in the Stoxx Europe 600 Index.
Standard Life, Scotland’s biggest insurer, dropped 3.3 percent to 365 pence. The shares fell 2.6 percent yesterday after the company reported first-half earnings.
“We are encouraged by the fact that management is cutting costs, but we question whether the company can continue to do this faster than the gross revenue margin decline we expect due to increased transparency and competition in the industry,” a team of analysts at Societe Generale SA wrote in a report today.
The number of shares trading hands on FTSE 100-listed companies was in line with the average of the past 30 days, data compiled by Bloomberg show.
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