Reuters: Hot Stocks: Miners lead UK stocks rally on 'fiscal cliff' deal

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Miners lead UK stocks rally on 'fiscal cliff' deal Jan 2nd 2013, 08:53 Wed Jan 2, 2013 3:53am EST * FTSE 100 gains 1.4 percent on first session of 2013 * Miners lead advance as copper price jumps * Banks in demand; Barclays helped by target hike * Wm.Morrison blighted by negative broker comment By Jon Hopkins LONDON, Jan 2 (Reuters) - Britain's top share index jumped higher on the first trading session of 2013 after U.S. lawmakers approved a deal preventing massive tax hikes and spending cuts, boosting the outlook for the new year. The Republican-controlled House of Representatives late on Tuesday finally approved a bill that will raise taxes on top U.S. earners, fulfilling President Barack Obama's re-election promise and avoiding the "fiscal cliff" of $600 billion in broad-based tax hikes and spending cuts which threatened to drag the U.S. economy into recession. At 0832 GMT, the FTSE 100 index was up 80.39 points, or 1.4 percent, at 5,978.20, having ended a thinly traded half-day session on Monday, New Year's Eve down 0.5 percent as traders awaited news on the negotiations. "Investors are trading with a sense of relief this morning after lawmakers in Washington agreed on a compromise to avoid the fiscal cliff that has been the dominant theme in equity markets since the Presidential elections back in November," Mike McCudden, Head of Derivatives at stockbroker Interactive Investor said. "There will no doubt be a few more twists and turns in the days ahead as the bears pour over the detail of the compromise that has been struck on Capitol Hill but for now investors have the concrete news they were hoping for," McCudden added. Asia stocks rose strongly, copper prices hit a two-week high, and Brent crude reached a one-month peak on Wednesday after the deal, with upbeat manufacturing data from top commodities consumer China also helping. China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high, adding to evidence that the world's second-largest economy was headed towards a steady revival in growth. Miners led the blue-chip gainers, contributing almost 20 points of the FTSE 100's advance, boosted by the jump in commodity prices. Banks were also in demand, with Barclays the top blue-chip gainer, up 4.0 percent, with traders saying the stock was also helped by a price target hike from Investec Securities to 285 pence, up from 260 pence. MORRISON MAULED There were just two blue chip fallers, with WM Morrison the worst off, down 0.7 percent, with the food retailer impacted by some negative broker comment, including a cut to estimates and its price target by Jefferies International. "Recent market share updates have highlighted soft trading momentum at Morrisons. We believe this likely reflects consumers trading down to discounters and continued online share shift. We now assume Christmas LFL sales (to be reported on 7 January) to have fallen by 2.8 percent, prompting a 3/4 percent cut to mid-term estimates and a reduction in our 2013 target ambition to 310 pence," Jefferies said in a note. British American Tobacco, was the only other FTSE 100 faller, down 0.6 percent. Ex-dividend factors clipped 0.27 points off the FTSE 100 index on Wednesday, following a price adjustment by market makers, with credit checking firm Experian trading without entitlement to its latest dividend payment. Although the market mood seemed euphoric as 2013 kicked off, commentators were still cautious for the near term. "It's only a matter of time before market participants lose their buzz as U.S. lawmakers will have to reconvene to address the remainder of unresolved issues. Judging by the disruptive game of brinkmanship US lawmakers played in the final weeks of 2012, markets have lost their trust in U.S. politicians," Joe Rundle, head of trading at ETX Capital said. (Reporting by Jon Hopkins; Editing by Toby Chopra) Link this Share this Digg this Email Reprints

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