April 19, 2016 / 8:36 AM / 4 years ago

FTSE hits four-month high as miners rally

LONDON (Reuters) - Britain’s benchmark stock market index rose to its highest level in four months on Tuesday, lifted by stronger mining and banking stocks.

A man shelters under an umbrella as he walks past the London Stock Exchange in London, Britain August 24, 2015. REUTERS/Suzanne Plunkett

The blue-chip FTSE 100 index .FTSE was up 51.83 points, or 0.4 percent at 6,405.35 points, having hit a high of 6,418.25 - a new peak for 2016 and its highest level since early December 2015.

Mining stocks such as Anglo American (AAL.L), Antofagasta (ANTO.L) and Glencore (GLEN.L) advanced 7.5 to 8.5 percent, on economic signals coming from China, the world’s second-biggest economy and the leading global consumer of metals.

Rio Tinto (RIO.L) rose 2.8 percent even though it cut its 2017 production guidance from its Australian iron ore mines. Investors took comfort from an 11 percent rise in overall iron ore shipments.

Precious metals miner Fresnillo (FRES.L) was up 5 percent, benefiting from silver hitting a ten-month high.

“We’ve had a commodity-driven rally since February. However, there is a danger that there may be a pullback soon, given the lingering uncertainty over the Brexit vote in June on Britain’s membership of the EU,” Thames Capital Markets’ chief strategist Nav Banwait said.

The FTSE 100 is up 2.6 percent since the start of 2016, but remains 10 percent below a record high of 7,122.74 points reached in April 2015.

The index dipped from its high and underperformed euro zone shares, however. Sterling rallied against the euro and the dollar after two polls showed a healthy lead for the “In” campaign ahead of a June 23 referendum on Britain’s EU membership.

That made British shares more expensive for holders of other currencies and crimped stocks with global exposure.

“A weak dollar definitely has an impact, and a lot of FTSE companies have a lot of business outside the UK,” said Mark Foulds, sales trader at ETX Capital.

HSBC’s shares rose 1.3 percent, contributing over four points to the index’s advance, after the bank’s chief executive said HSBC was considering a share buyback, with rival banks such as Standard Chartered (STAN.L) and Barclays (BARC.L) also climbing.

“They tend to follow the big ones, and you don’t get much bigger than HSBC. So if they go for a buyback, others might,” said ETX Capital’s Foulds.

Editing by Susan Thomas

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