Commodities send FTSE 100 up to six-week high
STRENGTH from commodity stocks helped Britain’s top shares inch up to its highest close in six weeks yesterday, but trading was light and investors were sceptial about prospects for further gains.
The FTSE 100 closed up 7.06 points, or 0.1 per cent, at 6,016.98, adding to the six-week closing high seen on Friday after solid US jobs data boosted confidence surrounding recovery momentum in the world’s largest economy.
Blue chips have rallied nearly eight per cent from a 2011 low on 15 March, as investor confidence returned following the shock of Japan’s earthquake and unrest in the Arab world.
Volumes were light, however, with the FTSE trading below 80 per cent of its average 90-day volume. Trading was thin for most trading sessions in March. Some investors said this indicated gains made in recent sessions were fragile.
“If volume falls as prices rise, that it is not a setting for reliable price action,” said Charles Morris, manager of the HSBC Wealth opportunities fund.
Mining stocks provided the bulk of the upward momentum yesterday as optimism on the outlook for corporate earnings offset concerns over political upheaval in North Africa and the Middle East and Europe’s debt crisis.
Precious metals miner Fresnillo gained 2.9 per cent as gold rose back above $1,430 against a weakening dollar, ahead of the European Central Bank’s next interest rate decision. Aggreko was up 5.3 per cent, as the temporary power provider prepared to ship gas and diesel generators to Japan which will provide emergency electricity supplies to the grid from June.