March 5, 2018 / 10:38 AM / 3 months ago

Miners, energy stocks boost FTSE up from 14-month low

LONDON (Reuters) - Britain’s top share index recovered a little lost ground on Monday thanks to gains among mining companies and commodity stocks which had been among the worst hit after U.S. President Trump threatened higher tariffs on steel and aluminium imports.

A red London bus passes the Stock Exchange in London, Britain, February 9, 2011. REUTERS/Luke MacGregor/File Photo

The FTSE 100 .FTSE was up 0.7 percent at 7,103.30 points by 1008 GMT, in line with a broadly positive European market. However, the index remained close to its lowest level since December 2016, which it reached on Friday.

UK stocks also underperformed European peers with Germany's DAX .GDAXI ending the day up 1.5 percent and the STOXX 600 up 1.1 percent.

“The bounce for the FTSE is tepid at best,” Mike van Dulken, head of research at Accendo Markets, said, adding that Brexit was still hanging over the market following a speech by Prime Minister Theresa May on Friday which failed to persuade many investors that a deal with the European Union was any closer.

The materials and energy sectors added the most points to the index, around 18 points collectively as oil prices advanced before a meeting between OPEC and U.S. shale firms. Metals prices also firmed.

Shares in Royal Dutch Shell (RDSa.L) rose 0.8 percent while BP (BP.L) gained 1.3 percent.

Miners Rio Tinto (RIO.L) and BHP Billiton (BLT.L), which both have high exposure to iron ore, gained more than 1 percent and partially recovered some of the previous session’s losses when steelmakers were hit by concerns around Trump’s plans to put tariffs on steel and aluminium imports.

Among the biggest gainers were housebuilding stocks, after a May announced a draft policy to overhaul planning laws in a bid to free up more land for housebuilding to ease the country’s housing shortage.

Bovis Homes (BVS.L) gained 4.5 percent, and Persimmon (PSN.L) rose 2.2 percent. Jefferies analysts said the changes to planning laws were positive for housebuilder shares, which have fallen in recent months to their lowest in more than a year. .FTNMX3720

Shares in grocer Tesco (TSCO.L) rose 0.7 percent after the company completed its $5.5 billion takeover of Booker BOK.L, with Jefferies raising its rating on the stock to a “buy”.

Supermarket stocks have come under pressure from concerns around an inflation squeeze on consumers and a price war brought on by discount food retailers.

“The obvious benefits of reducing input headwinds and of a less defensively minded consumer should provide a more helpful backdrop to grocers from here,” analysts at Jefferies said in a note. “Whether this will be supercharged by more modest discounter openings remains to be seen, but we are hopeful,” Jefferies added, also upgrading Morrisons (MRW.L) to “buy”.

Small-cap retailer Mothercare (MTC.L) however sank another 10.8 percent, after a profit warning on Friday knocked 15 percent off its share price.

Rentokil Initial (RTO.L) was a rare faller on the FTSE 100, down 4.4 percent. The pest control company’s shares had their worst day in 9 years last week after results.

Outside of the blue chips, Ultra Electronics (ULE.L) sank 10 percent and hit a three-month low after the defence contractor terminated its $234 million acquisition of Sparton Corp (SPA.N) due to anti-trust concerns raised by the U.S. Department of Justice.

(To view a graphic on Mining Stocks, click: reut.rs/2CZrvkU.)

Reporting by Kit Rees; editing by Angus MacSwan

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