LONDON (Reuters) - Recovering mining stocks boosted Britain’s top share index to its highest in six weeks on Tuesday, as concerns around global trade continued to ease.
Energy and materials sectors drove gains as easing concerns over global trade underpinned commodities prices.
Miners recovered following some large losses in the previous session when stocks with exposure to Russia were hit after the United States unveiled new sanctions on Russian officials, oligarchs and their companies.
Both Rusal and EN+ (ENPLq.L) were targeted by the U.S. measures.
“Glencore shares were hit, but we think that the market has overreacted – in a worst-case scenario the foregone business from Rusal volumes is worth around 0.9 percent of 2018 (estimated) EBITDA, whilst if the Rusal stake on the balance sheet ($933m) is worth zero, this would be around 1.3 percent of Friday’s market cap,” wrote Bernstein mining analyst Paul Gait in a note.
EN+ shares rose 7 percent but were nowhere near recovering their dramatic losses. The stock has halved in value since Friday’s open.
Shares in Evraz (EVRE.L), a Russian steel producer which plunged 14.5 percent in the previous session, also recovered slightly to trade 1.1 percent higher.
Last week risky assets were hit by an escalation in tensions between the United States and China, with investors worried that the tariffs would leads to a full-blown trade war.
However, a promise from Chinese President Xi Jinping to lower import tariffs on products such as cars helped soothe market nerves.
“President Xi’s speech overnight appears to have struck the right tone, providing some relief for investors who have been buffeted by the recent war of words between Trump and China over trade,” said Rebecca O’Keefe, head of investment at Interactive Investor.
The utilities and consumer staples stocks that investors had rushed into during market stress fell back. United Utilities (UU.L), Severn Trent (SVT.L) and National Grid (NG.L) lost between 1 and 2.9 percent.
National Grid said it expected low demand for electricity this summer.
British greeting card retailer Card Factory (CARDC.L) topped the gainers among mid cap stocks .FTMC, its shares jumping 12.6 percent after reporting a rise in annual sales and saying it plans to declare a special dividend in September.
Reporting by Kit Rees and Helen Reid; Editing by Robin Pomeroy