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Miners lead FTSE higher on China stimulus hints
Mining stocks race to top of FTSE 100 on hopes of further stimulus from top metals consumer China.
Miners have led the FTSE 100 higher as they mounted the next leg of their strong rally from 12-year lows, with investors buoyant at the prospect of more stimulus from top metals consumer China.
The UK blue-chip index rose 74 points, or 1.2%, to 6,086, with mining stocks leading the way on stronger metals prices.
That helped the index shoulder a plunge in the shares of Royal Bank of Scotland (RBS), down 8.5% at 223.2p as the bank unveiled a £2 billion loss for 2015 and postponed the resumption of dividends until 2017 at the earliest.
That came as Zhou Xiaochuan, governor of the People's Bank of China, hinted the central bank was preparing to launch another round of stimulus.
'Equity markets are continuing their northerly march, sentiment buoyed by hopes that a G20 meeting of finance ministers to discuss global economic stimulus can deliver the goods,' said Mike van Dulken, head of research at Accendo Markets.
'Especially host China, whose central bank sees room for further easing of policy to address downside risks to its slowing economy.'
Joining mining stocks at the top of the index was Pearson (PSON), up 5.5% at 845.5p after the educational publisher maintained its dividend and said restructuring should deliver profits of £800 million or more in 2018.
'We are encouraged that Pearson has intensified its efforts to meet external and internal challenges and has committed to maintaining its dividend,' said Roddy Davidson, analyst at Shore Capital.
'Our view on the long-term outlook for global learning spend is also positive (reflecting a combination of population growth, growth in public and private sector investment, and an expanding middle class within emerging markets) and further restructuring should leave Pearson better placed to capitalise.'
Oil stocks were also in the ascendancy, as the price of Brent crude rose 2.1% to $36, as traders closed 'short' positions and data showed strong petrol demand in the US. Shell (RDSb) rose 3.4% to £16.36 while BP (BP) was up 2.2% at 346p.
Joining RBS at the bottom of the index was British Airways owner International Airlines Group (ICAG), down 4.5% at 533.5p despite posting a 64% rise in annual pre-tax profits.
'Chief executive Willie Walsh's warning that a strong dollar offsets some of the gains from the low oil price took the edge off the results, especially with oil prices rising today,' said Jasper Lawler, market analyst at CMC Markets.
'Clearly a low oil price and resulting lower fuel costs has been the single biggest factor in IAG's as well as the other European airline's success over the past year so there are some jitters over a possible base in the oil price,' he added.
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- Royal Bank of Scotland Group PLC (RBS.L)
- Glencore PLC (GLEN.L)
- Rio Tinto PLC (RIO.L)
- BHP Billiton PLC (BLT.L)
- Anglo American PLC (AAL.L)
- Pearson PLC (PSON.L)
- Royal Dutch Shell PLC (RDSb.L)
- BP PLC (BP.L)
- International Consolidated Airlines Group SA (ICAG.L)
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by David Kempton on May 24, 2016 at 17:15