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FTSE powered by miners as China stimulus hopes grow

by Daniel Grote on Mar 21, 2014 at 10:45

FTSE powered by miners as China stimulus hopes grow

The FTSE 100 made moderate gains driven by miners amid optimism that top metals consumer China will undertake further stimulus measures to bolster its slowing economy.

The blue chip index rose 23 points, or 0.4%, at 6,565, with mining stocks Anglo American, Fresnillo and Rio Tinto leading the way.

Anglo American (AAL.L) jumped 31p, or 2.2%, to £14.43, while Fresnillo (FRSE.L) rose 16p or 1.8% to £8.83. Rio Tinto (RIO.L) added 47p, or 1.5%, to £32.05.

The rally in miners came as fears over China’s economic slowdown sparked rumours it may launch fresh stimulus measures.

Reports have claimed China will speed up planned investment and construction spending, and that Chinese prime minister Li Keqiang has urged local governments to do the same with their budgets for the year.

Tim Condon, Asia analyst for ING Financial Markets, said: ‘We see this as a 2013-style mini-stimulus. We remain of the view that monetary policy will be on hold this year.’

Elsewhere insurer Resolution (RSL.L) staged a small recovery, rising 2p or 0.7% at 320p, after seeing a 10% drop in its shares over the last two days after it was hit by the Budget pension reforms.

Analysts at Barclays believed the fall in Resolution’s share price had been overdone and said that with a 6.7% yield, the stock was attractive at current levels. It reiterated its 'overweight' rating and price target of 273p.

US markets closed higher overnight after economic data pointed to an improving economy, overshadowing concern over potential interest rate rises.

In Europe the EuroSTOXX 50 is set for its biggest weekly gain since December. The index is up 2.8% so far, although investors will monitor events between the West and Russia and hope the tit-for-tat sanctions over Crimea do not escalate.

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