February 12, 2014 / 9:22 AM / 5 years ago

Miners help extend FTSE rally into sixth day

LONDON (Reuters) - FTSE rose for a sixth straight session on Wednesday, boosted by miners after top metals consumer China reported robust trade data.

A worker shelters from the rain as he passes the London Stock Exchange in the City of London at lunchtime October 1, 2008. REUTERS/Toby Melville

Miners, which fell sharply in 2013, are staging a recovery after a sector-wide drive to offset falling metals demand with cuts in spending. They got a boost on Wednesday from the fresh evidence that the Chinese economy is stabilising.

The UK mining index, up 1.2 percent, hit a three-month high on Wednesday after Chinese exports and imports beat expectations in January.

“Economic data from China is providing a lift to the mining sector, easing fears with regards to a potential slowdown in commodity demand,” Keith Bowman, equity analyst at Hargreaves Lansdown, said.

The health of the Chinese economy is a key factor for the FTSE 100, given the mining sector’s heavy weighting. It is the fifth biggest sector on the UK benchmark, accounting for around 8 percent of the index, according to Thomson Reuters data.

The sector has got off to a solid start this year, up nearly 6 percent, against a 1 percent drop on the FTSE 100.

“We expect the miners to continue to perform well in the immediate short term, as the market focuses on better cashflow from volume growth, weaker FX, cost reductions and capex cuts,” Goldman Sachs said in a note.

The blue-chip FTSE 100 index was up 7.58 points, or 0.1 percent, at 6,680.24 points by 1543 GMT, marking its sixth straight day of gains.

The market showed little reaction to comments from Bank of England Governor Mark Carney and other British monetary policymakers at a news conference after the Bank published its quarterly Inflation Report.

“It’s pretty much steady as she goes,” CMC Markets senior market analyst Michael Hewson said. “He’s reiterated the low interest guidance, and as such I think markets have acted fairly benignly towards that.”

The FTSE 100 index has rebounded from its December lows, which have acted as the springboard for a decent bounce, lifting the index above its 50-day moving average.

Bill McNamara, a technical analyst at Charles Stanley, said the short-term outlook remains encouraging, with most indicators pointing towards further gains. His next upside target for the index stands at 6,750 points.

Additional reporting by Atul Prakash and Alistair Smout; Editing by John Stonestreet

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