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Miners lead FTSE rally as profits and dividends rocket

BHP Billiton and Antofagasta reveal soaring profits and dividends, driving their shares to the top of the FTSE 100.

 
Miners lead FTSE rally as profits and dividends rocket

A rally in mining shares has propelled the FTSE 100 higher, as BHP Billiton and Antofagasta underlined their recovery from the worst of the commodities crisis by reporting soaring profits.

The UK blue-chip index rose 54 points, or 0.7%, to 7,373, with BHP Billiton (BLT) among the top risers, up 2.5% at £14.00, after announcing full-year profits soared 454% from last year's lows.

Antofagasta (ANTO) wasn't far behind, up 2.2% at 975.5p as profits for the first six months of the year jumped 87.8% compared to the first half of 2016.

Both also unveiled big jumps in the dividend, up 177% to 83 cents (65p) at BHP Billiton, and 231.5% higher at 29.5 cents (23p) at Antofagasta.

'The focus on cost control at BHP's already very low cost assets means cash generation is soaring now commodity prices have turned,' said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

'Net debt is tumbling, and as that falls towards more sustainable levels it will free up cash for other uses.'

AJ Bell investment director Russ Mould said a similar strategy was underway at Antofagasta. 'Antofagsata was an early riser following a strong first half with revenues and earnings boosted by higher copper prices and increased sales,' he said.

'Margins have improved and operating costs have been reduced as part of its "costs and competitiveness" programme.'

But the biggest riser on the index was Tesco (TSCO), up 3.7% at 183.6p after figures from market researcher Kantar Worldpanel showed a 3% jump in sales in the 12 weeks to 13 August.

'Today's data bodes well for the retailer,' said David Madden, market analyst at CMC Markets UK. 'The share price was in decline throughout 2017, but it is off the June lows and is eyeing the 187p mark - this level will need to be cleared in order for a rally to be sustained.'

The broad rally meant the FTSE 100 was able to take the spectacular fall in Provident Financial (PFG) in its stride. Shares in the doorstep lender tumbled 65% to 603p after it announced the departure of chief executive Peter Crook, scrapped its dividend and revealed an FCA investigation into its repayment option plan (ROP) product, as it delivered its second profit warning in two months.

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