Reuters: Hot Stocks: China data boosts UK miners to 2-month high, FTSE UP

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China data boosts UK miners to 2-month high, FTSE UP Aug 9th 2013, 16:01 Fri Aug 9, 2013 12:01pm EDT (Updates with closing prices) * Blue-chip FTSE 100 index ends 0.8 percent higher * UK mining index up 5 pct, hits 2-month high * Mining index gains 20 pct in 1 mth, up for 5th week By Atul Prakash LONDON, Aug 9 (Reuters) - UK-listed miners rose to a two-month high, helping the FTSE 100 index to end stronger on Friday, after factory output data from China boosted the demand outlook for raw materials. Sentiment also improved after Britain's construction output grew more than expected, house prices in England and Wales reached an all-time peak and the trade deficit in goods narrowed, reviving expectations of a broader economic recovery. The UK mining index, which includes heavyweights such as Rio Tinto and BHP Billiton, climbed 5 percent after China's factory output grew in July at its fastest pace since the start of the year. "Chinese data acted as a catalyst to mining equities, which have scope to trade a lot higher from where they are now," said Daniel Harris, director and head of dealing at H2O Markets. "Since miners have such a strong weight on the FTSE index, if they do flourish, then you should see equity markets trading much higher in the coming weeks." Yet the upbeat tone contrasts with recent earnings from the sector. Rio for instance said this week underlying earnings for the group fell 18 percent to $4.23 billion in the first six months of the year, dragged down by weaker prices, particularly of iron ore. Shares in Rio - which according to Morgan Stanley research makes around 46 percent of its revenue in China - were up 5 percent at 3,167 pence, having hit a four-month high, but remain well shy of their record 5,920 set in mid-2008. China's factory data, which followed recent forecast-beating trade numbers, raised expectations the world's second-biggest economy was coming back on track after more than two years of slumping growth and that metals prices could recover. Prices of copper, aluminium, nickel and zinc rose 1.1 to 3.7 percent. The UK mining index, which has surged nearly 20 percent in a month, gained for a fifth straight week, helping the blue-chip FTSE 100 index to close 53.71 points, or 0.8 percent, higher at 6,583.39. The FTSE is up 12 percent so far this year. "The mining sector is one cyclical that has been left behind in the last 12 months on disappointing China data," Robert Parkes, equity strategist at HSBC, said. "The reaction that we have seen to some recent encouraging numbers ... highlights that investors may have got too pessimistic on China and as a result a little bit of good news here is going a long way. We expect that we will not see a hard landing in China. We see the economy stabilising in the second half of this year." (Editing by Ruth Pitchford) Link this Share this Digg this Email Reprints

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