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Miners drive FTSE higher but Admiral slumps

Miners track rallying metal prices to drive FTSE 100 higher, but Admiral slumps after posting only marginal profit increase.

 
Miners drive FTSE higher but Admiral slumps

Miners have led the FTSE 100 higher, tracking a rally in metal prices, to help the index claw back more of the losses suffered in last week's sell-off on North Korea fears.

The UK blue-chip index rose 49 points, or 0.7%, to 7,433, with miners leading the way, as zinc prices hit their highest levels in nearly a decade, while aluminium prices reached levels not seen since November 2014. Risers included:

  • Glencore (GLEN) +2.6% at 339.8p;
  • Antofagasta (ANTO) +2.3% at 942.5p;
  • Rio Tinto (RIO) +2.2% at £34.49;
  • Anglo American (AAL) +2% at £12.66.

The FTSE 100 has now rallied 122 points this week, although it has not yet clawed back all the ground lost since fears over the nuclear standoff between the US and North Korea sparked a sell-off.

'Equities are still in demand this morning as investors keep buying into the market in light of the cooling political tensions surrounding North Korea,' said David Madden, analyst at CMC Markets UK.

'The stalemate between the US and North Korea is still ongoing, but as we are seeing diplomacy being implemented rather than military action, traders are taking on more risk and snapping up stocks.'

But Admiral (ADML) bucked the rising market to slump 5.3% to £20.63, after the insurance group posted just a 2% rise in profits for the first half of the year, held back by changes to the way payments are made to accident victims, and cut its interim dividend by 11% to 56p.

'Admiral has boosted customer numbers and turnover rose by 15% but the group had to absorb a hit from the change to compensation rates which came into effect last year,' said Russ Mould, investment director at AJ Bell.

'While most of the impact from the increase in the costs of large injury claims was taken in 2016's second-half results, some extra costs were carried over.'

Balfour Beatty turnaround

On the FTSE 250, shares in Balfour Beatty (BALF) were buoyant, up 7.4% at 281.9p after swinging to a £12 million profit in the first half of the year, compared to a £15 million loss over the same period last year.

Hargreaves Lansdown analyst Nicholas Hyett said the strong results were evidence of the success of boss Leo Quinn's turnaround strategy.

'Evidence at the half year suggests Balfour is making headway,' he said. 'Margins are heading in the right direction and while the order book is shrinking, the group attributes that to being more selective in the projects it undertakes. Given that several of  the historic contracts have proven loss making, that's welcome.'

Shares in Hochschild Mining (HOCM) meanwhile slumped into the red, down 14% at 272.5p, as first-half profits and earnings fell on higher costs. 

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