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Europe: FTSE sets 2016's highest closing level, miners boost
[LONDON] Britain's top share index recorded its highest closing level of 2016 on Wednesday, boosted by the mining sector after Federal Reserve Chair Janet Yellen called for caution on raising interest rates, lifting riskier assets.
The FTSE 100 index ended 1.6 per cent higher at 6,203.17 points, its highest closing level of 2016. The index remained just a shade below this year's intra-day high of 6,242.32 points, touched in January.
The UK mining index surged 5.6 per cent, bouncing back from a one-month low reached in the previous session. Before Wednesday's rally, it had fallen 16 per cent since a 4-1/2 month high in March, pressured by a firmer dollar.
Miners rallied following Yellen's comments that the US central bank should proceed only cautiously as it looks to raise rates. That hit the dollar, boosting the value of dollar-earning firms that report profits in sterling.
Anglo American, Glencore, Rio Tinto and BHP Billiton jumped between 5.4 and 11.8 per cent.
"Global economic growth is spluttering and the idea that we'll see another rate hike from the Fed in the short term is being kicked into the long grass," Tony Cross, market analyst at Trustnet Direct, said in a note. "This is also driving the dollar lower so commodity stocks are finding widespread support with the natural resource plays scattered across the top of the board." Energy stocks were also in demand, with the UK oil and gas index rising 3 per cent following a rally in crude oil prices. Shares in Royal Dutch Shell, BP and Tullow Oil rose 2.8 to 3.9 per cent.
Outside the blue chips, Premier Foods was up 4.4 per cent after US firm McCormick raised its offer for the firm.
The new bid proposal of 65 pence per share was above the previous, rejected offer of 60 pence per share. Shares in Premier Foods traded at around 60 pence after the new bid was made. "We see 65p as a good compromise price, allowing Premier's management to highlight the extra value it has extracted from McCormick, whilst also offering shareholder's the opportunity of a cash exit today at a reasonably full ... valuation," analysts at Shore Capital said in a note.