LONDON MARKETS: FTSE 100 Builds On Gains As Miners Get China Boost

By Carla Mozee, MarketWatch Features Dow Jones Newswires

BOE policy maker calls for an interest rate hike now

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U.K. stocks pushed higher Thursday, as miners logged gains in the last trading session of August after upbeat manufacturing data from major customer China.

Stocks also strengthened during the session as losses accelerated for the pound against the U.S. dollar.

The FTSE 100 index rose 0.6% to 7,409.81, with only the oil and gas sector in the red. The London benchmark on Wednesday closed up by 0.4% (http://www.marketwatch.com/story/ftse-100-bounces-back-from-1-week-low-as-north-korea-fears-ease-2017-08-30), coming back from a one-week low, and was on course for a modest monthly rise of 0.5%. That would mark a second straight monthly win for the index.

The basic materials group was the best performing as all mining shares moved higher. The advances came after an official gauge of China's factory activity rose in August (http://www.marketwatch.com/story/chinas-official-manufacturing-pmi-beats-forecasts-2017-08-30). China is a key buyer of industrial and precious metals, so mining companies are sensitive to developments in the world's second-largest economy.

"This is some welcome good news from Asia following recent geopolitical woes, building on yesterday's solid US GDP/ADP prints, compounding risk appetite at the continued expense of safe havens," such as gold, the yen, the Swiss franc and bonds, said Mike van Dulken and Henry Croft at Accendo Markets in a note.

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Shares of copper producer Antofagasta PLC (ANTO.LN) tacked on 3.8%, standing atop advancers on the FTSE 100. Anglo American PLC (AAL.LN) picked up 2.9%, and Glencore PLC (GLEN.LN) moved up 2.3%.

Iron ore producer BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) was up 1.2%, brushing past a ratings downgrade to underperform from sector perform at RBC.

"BHP's decision to exit the U.S. onshore [shale] business is a positive," said RBC analyst Tyler Broda in a note. "However, BHP's mature asset base, especially in petroleum creates medium-term pressure on profitability."

Rate view: Michael Saunders, a member of the rate-setting board at the Bank of England, said Thursday the central bank should raise interest rates now (http://www.marketwatch.com/story/boes-saunders-bank-should-hike-rates-now-2017-08-31). Saunders was one of two policy makers who earlier this month voted in favor of a rate hike, but the final tally was 6-2.

But the pound found no support after Saunder's remarks. Sterling fell to $1.2880, from $1.2925 late Wednesday in New York.

"The signs of a breakdown in Brexit talk are quite visible, with reports in the press about the U.K.'s takedown of bits of the EU's negotiating position," Chris Beauchamp, chief market analyst at IG, said about downward pressure on the pound. As well, "Saunders has already voted for a rate rise -- he's probably not the massive hawkish catalyst as you might think," he said. "We'd been in a different world," if such support for a rate hike were to come directly from Bank of England Governor Mark Carney, Beauchamp said.

Overall, "we're seeing a rebound dollar-wise after yesterday's ADP [jobs] and GDP numbers and ahead of tomorrow's jobs data. We're seeing something of a shift back in favor of the U.S. dollar whereas the last few months have been in favor of everyone else's currency," Beauchamp added.

On the data front, U.K. consumer confidence improved slightly in August, with the GFK survey coming in at minus 10 from minus 12 in the previous month.

U.K. and EU officials on Thursday were wrapping up a third round of talks about the U.K.'s exit from the bloc. The chief Brexit negotiator for the U.K., David Davis, was set to hold a press conference with the EU's top Brexit negotiator, Michel Barnier, in Brussels on Thursday afternoon.

Stock movers: Few shares on the FTSE 100 were trading lower Wednesday. Shares of Provident Financial PLC (PFG.LN) and Royal Mail PLC (RMG.LN) gave up 3% and 0.5%, respectively. The companies will leave the FTSE 100 after the close of trade on Sept. 15, and enter the mid-cap FTSE 250 Index , said index provider FTSE Russell on Tuesday.

Shares of BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) fell 0.1% and 0.3%, respectively, as oil prices moved higher.

Off the FTSE 100, shares in Ladbrokes Coral turned lower and fell 1.1%. Shares had been higher earlier after the gambling company said the integration of the former Gala Coral (http://www.marketwatch.com/story/ladbrokes-coral-profit-drops-on-integration-costs-2017-08-31) was going well and the revenue was up 1% on the year. Profit for the first half was down 8% as integration costs rose.

(END) Dow Jones Newswires

August 31, 2017 06:33 ET (10:33 GMT)