August 31, 2017 / 9:38 AM / 2 years ago

Miners help Britain's FTSE score second monthly gain

LONDON (Reuters) - Britain’s top share index rose on Thursday, extending gains from the previous session as support from commodities-related stocks and financials helped the blue-chip index score its second consecutive monthly gain.

Pedestrians leave and enter the London Stock Exchange in London, Britain August 15, 2017. REUTERS/Neil Hall

The FTSE 100 .FTSE ended up 0.9 percent, while mid-caps rose almost 1 percent.

Mining stocks were the standout performers, with Antofagasta (ANTO.L), Anglo American (AAL.L), Glencore (GLEN.L) and Rio Tinto (RIO.L) among the top gainers as the price of copper strengthened. [MET/L]

Mining companies have been among the best performers in August, with the sector < .FTNMX1770> ending the month up 7.3 percent.

Precious metals miner Randgold Resources RRS.L has led the way, climbing 12 percent this month as geopolitical jitters resulting from tensions between North Korea and the United States have propped up demand for safe-haven assets.

Peer Fresnillo (FRES.L) has gained 5.2 percent this month.

“The strength in industrial metals has been something of a saviour for the FTSE,” said Jasper Lawler, head of research at London Capital Group, adding that recent weakness in sterling has also been a contributing factor.

“No matter what gets thrown at the market, there still seems to be a fair bit of resilience, so even with all the concern around North Korea and more domestically about the Brexit negotiations, there’s an underlying confidence that we’re still in a bull market.”

Financials also extended their recovery from the week’s earlier flight from riskier assets after North Korea launched a missile over Japan on Tuesday.

While individual moves were generally rather muted, downgrades from brokers weighed on shares in security firm G4S (GFS.L), which fell 3.2 percent after UBS cut its rating on the stock to “neutral” from “buy”. However, UBS analysts added that they had turned positive on the broader UK outsourcing sector because of growing earnings momentum.

TP ICAP (TCAPI.L) rose 6.3 percent after Morgan Stanley raised its price target on the interdealer broker on prospects of generous dividend increases.

Shares in troubled subprime lender Provident Financial Group (PFG) (PFG.L) also dropped 1 percent after downgrades from brokers Jefferies and Canaccord Genuity.

Provident’s shares have dived 57 percent this month after a profit warning prompted by problems at its door-to-door lending business.

“PFG now faces a layer of uncertainty brought about by the disastrous implementation of a new operating model in home collect credit. This makes both forecasting and valuation more than usually difficult,” Jefferies analysts said in a note.

“In the short term its dividend-paying capacity is impaired and over the longer term we now use a lower payout ratio.”

Jefferies cut its rating on Provident to “hold” from “buy”.

Provident Financial will also be excluded from the FTSE 100 index in the quarterly reshuffle, FTSE said on Wednesday, along with Royal Mail (RMG.L), while NMC Health (NMC.L) and housebuilder Berkeley Group (BKGH.L) will join the top share index.

Among mid caps, UK construction services firm Carillion (CLLN.L) will be relegated to the small caps, along with Northgate (NTG.L) and Petra Diamonds (PDL.L). The changes will be implemented after the market closes on Sept. 15, taking effect at the start of trading on Sept. 18.

Reporting by Kit Rees; Editing by David Goodman/Keith Weir

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