FTSE 100 Watch: Strong UK Data and Rise in Miners Take Footsie Higher

on Jul 9, 2013

iNVEZZ.com Tuesday July 9th: The Footsie hit a month-high in the morning trading session today, propelled by upbeat domestic data and a rally in this year’s much unloved mining sector. At 12.21 BST the British blue-chip index was 0.72 percent higher at 6,496.32.

The top winner on the FTSE 100 today was Royal Bank of Scotland with the shares up more than four percent to 300.50p in the morning. Investors flocked to the stock on speculation in the press that minority shareholders would be able to veto Chancellor George Osborne’s plans for a good/bad bank split. (Rumours of Veto Power for Minority Shareholders Lift RBS Share Price).

Banks followed the rally in RBS’ shares in the first half of today’s session with Barclays gaining 1.51 percent to 303.10p, HSBC edging up 0.33 percent to 719.78p and Standard Chartered rising by 0.91 percent to 1,498.50p.
Mining stocks were up in the morning buoyed by U.S. peer Alcoa, which traditionally kicks off the global earnings reports season. The company posted a better-than-expected adjusted profit for the second quarter on Monday and forecast increased demand for aluminium. By midday Anglo American had gained 3.09 percent to 1,283.50p, Rio Tinto had surged 2.38 pecent to 2,733.12p, Fresnillo had added 3.42 percent to 952.50p and Vedanta Resources had increased by 3.27 percent to 1,041p.

“We’ve got a risk-on theme with Alcoa’s better-than-expected profits … Various investment funds have now upgraded their price targets for the FTSE and you are seeing people reallocating assets into equities, they are definitely very popular at the moment,” Jordan Hiscott, trader at Gekko Global Markets, said as quoted by 4-traders.com. Hiscott forecasts that the FTSE 100 could gain another four percent to about 6,750 by the end of next week.

!m[Better-Than-Expected Alcoa Earnings Set Off Rally in Mining Stocks](/uploads/story/3804/thumbs/pic1_inline.jpg)
On the macroeconomic front three UK surveys today showed rising house prices, improved business confidence and steady growth in retail sales. The upbeat figures offset the effect of gloomier manufacturing data, which showed that the sector shrank in May as production of pharmaceuticals and metals dropped. The Office of National Statistics said today that factory output declined by 0.8 percent month on month in May, falling short of the median forecast for a 0.4 percent increase from a Bloomberg survey of economists.
“[It’s] perhaps not yet time to short, with recent positive economic data driving sentiment and valuations not yet a concern,” Christopher Street Capital analysts said, as quoted by the Business Report.
**The FTSE 100 was 51.66 points or 0.80 percent higher at 6,501.73 as of 09.07.2013, 13.01 BST.**