Eurasian leads the miners higher while Lloyds shines
THE FTSE 100 share index inched higher yesterday, helped by oil producers, which gained on firmer crude prices as US demand recovered, but banks fell after HSBC traded ex-dividend.
The index closed up by 3.89 points, or 0.1 per cent, at 4,689.67, after trading as low as 4,625.44 earlier in the day. Volumes on the UK benchmark were about 67 per cent of its 90-day daily average volume.
Oil majors were in demand, with BP, Royal Dutch Shell and BG Group up 0.5 to 1.3 per cent.
Crude prices reversed early losses to trade above $71 a barrel, as data showing demand is recovering in the US outweighed doubts about the strength of the global economy.
Eurasian Natural Resources led the mining sector higher, up 6.2 per cent to top the gainers’ list after the miner’s results beat expectations.
Fresnillo, BHP Billiton, Rio Tinto and Xstrata put on 1.3 to 5.8 per cent.
Among other large-cap gainers, Serco rose 2.4 per cent after Evolution Securities initiated coverage of the outsourcing group with a “buy” rating and a 500p target.
Banks shaved off the most points, with HSBC, Royal Bank of Scotland, Barclays and Standard Chartered down between 0.5 and 2 per cent. HSBC also traded ex-dividend.
However, Lloyds Banking Group added 2 per cent after the bank said it was reviewing a decision to close all branches of its Cheltenham & Gloucester unit as part of a shake-up in its mortgage and loans operations.
Lloyds shares were also lifted by an upgrade to “buy” from RBS.
Also in the financial sector, hedge fund firm Man Group sagged 3.7 per cent after the net asset value of its main AHL fund fell 2.2 per cent.
A slew of companies going ex-dividend also hurt the index. British American Tobacco, Hammerson, Pearson, Prudential, SABMiller, Scottish & Southern Energy and Thomson Reuters all fell after trading without the rights of dividend.
Bank of England Governor Mervyn King and two other Monetary Policy Committee (MPC) members wanted to raise quantitative easing by £75b this month but were outvoted by their six colleagues.
The six-three split vote revealed in the minutes of the MPC’s meeting in early August, published yesterday, sent shockwaves through currency and bond markets.
Elsewhere, manufacturing orders fell slightly more than expected in August but firms were less gloomy about their future production than at any time in the last year, a survey showed.