March 12, 2015 / 9:07 AM / 3 years ago

Stronger mining and oil shares boost Britain's FTSE index

* Blue-chip FTSE 100 share index rises 0.7 percent

* Energy, mining shares rally on firmer commodities

* Morrisons slip after sharp decline in profits

By Atul Prakash

LONDON, March 12 (Reuters) - Britain’s top share index rose in early trading on Thursday, with mining and energy stocks gaining the most on the back of a rise in commodity prices.

The UK mining index rose 1.3 percent and the oil and gas index was up 1.4 percent, with the sectors tracking a rally in copper prices after better-than-expected lending data from China

A gain in oil prices as speculators covered their positions ahead of a contract expiry also contributed to the rise.

Commodity stocks Rio Tinto Anglo American Fresnillo, Antofagasta, Randgold Resources and Royal Dutch Shell rose 1.0 to 3.0 percent.

“We’re seeing some definite pickup in sentiment across the raw materials sector after it took a heavy battering,” IG analyst Chris Beauchamp said.

“With the European Central Bank’s liquidity operations in full swing, it was only a matter of time before some of this found its way into UK markets, helping them to shrug off bad Chinese data.”

The blue-chip FTSE 100 index was up 0.7 percent at 6,767.53 points by 0851 GMT. The index is up about 3 percent so far this year.

However, Morrisons fell 1.4 percent after Britain’s fourth biggest supermarket signaled it would cut its dividend in 2015 following its lowest annual profit in eight years, hurt by a fierce industry price war.

“Given the magnitude of profit collapse ... the bigger issue is the stabilisation of Morrison’s trading and its re-positioning as a stronger medium-term operator generating prodigious cash flow,” Shore Capital said in a note.

Among mid-cap firms, oil producer Soco International slumped 27 percent after reporting a 54 percent fall in profits last year on the back of weak oil prices.

Another mid-cap firm Serco dropped 15 percent after kicking off a 555 million pound ($831 million) rights issue and saying it was unlikely to return to growth for another three years, as it reported a collapse in profits.

Several FTSE 100 companies fell after trading without the attraction of their latest dividend payouts. According to Reuters calculations, the effect of the resulting adjustment to prices by market-makers took 8.24 points off the index.

BHP Billiton, Direct Line Insurance Group and Hammerson dropped 0.4 to 1.8 percent. (Reporting by Atul Prakash; Editing by Tom Heneghan)

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