Market Report: Miners help push FTSE 100 to a four-year high

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The Independent Online

Part of the excitement surrounding the sector was prompted by comments from Rio Tinto's chief executive Leigh Clifford. He told reporters that China iron ore demand remained robust and suggested that Rio Tinto's sales of the commodity to the country could increase by 20 per cent this year.

Meanwhile, the latest economic data from China showed that worries about a slowdown of its economy have been greatly overdone. The figures showed that industrial production continues to grow at an annual rate of 16 per cent. This is very good news for resources players as the ongoing rapid industrialisation of China is key for their performance.

UBS and Cazenove also supported the sector by urging their clients to buy into Rio Tinto, BHP and Xstrata. Cazenove said: "We feel that the commodity supply will remain constrained by structural issues which continue to be underestimated by the market."

Elsewhere, UBS pushed BP 14.5p higher to 646.5p after upgrading its rating on the oil giant to "buy" from "neutral". The Swiss broker believes that BP has a clear competitive advantage over its rivals, courtesy of its TNK joint venture in Russia. As for the future direction of oil prices, it expects them to remain at current levels over the medium term. Royal Dutch Shell rose 55p to 1,875p, BG Group added 7.5p to 514.75p and Burren Energy gained 28.5p to close at 758.5p.

Whitbread added 11p to 959.5p as rumours of a possible break-up bid for the leisure conglomerate circled dealing rooms. But analysts were quick to note that Whitbread, which boasts a £2.4bn market capitalisation, is probably too big an acquisition for a private-equity firm that is acting alone.

BOC soared 42p to a fresh a high of 1,172p as City punters once gain piled into the stock, convinced that a takeover bid for the industrial gases group is just around the corner. Market professionals reckon that the most likely bidder for BOC is the German industrial giant BASF.

Vodafone rose 2p to 154.5p as Cazenove become the second broker in as many days to come out with a bullish piece of research on the mobile phone giant. The heavyweight broker raised its recommendation on Vodafone to "outperform" from "in line" and, as Morgan Stanley did on Wednesday, tipped next week's investor day at the group to be a very upbeat affair. Cazenove suggests that a re-rating of the stock could be on the way after next week's presentations by Vodafone.

Centrica fell 4p to 255.25p after the energy group dismissed the recent takeover rumours that have surrounded it. A spokesman for Centrica said the talk was nothing more than "hot air". Malaysia's Petronas, Gaz de France and the Russian gas giant Gazprom have all been talked of as potential buyers.

Credit Suisse First Boston sold 19 million BAE Systems shares at 328p, raising £62m for one of its institutional clients. Despite the sizeable placing, shares in the defence group continued their march higher and closed 3p better at 333p. BAE stock has risen more than 50 per cent over the past year. It has more than doubled over the past two years.

Reports in the German press that Salzgitter, the country's second-biggest steel firm, is on takeover alert led to speculation in London dealing rooms that Corus might be among those interested in buying the group. Salzgitter is said to be reinforcing its share buy-back programme and may even be moving parts of its pension provisions to an external fund to make itself less desirable to predators.

Morgan Crucible was boosted in early trading by talk of a 260p-a-share offer for the engineer. At one point, shares in the group hit 225.5p thanks to the rumours but dropped back in the afternoon to close at 213.25p, up 5.25p, after the company played down the speculation.

First Technology fell 1.75p to 173.5p on worries that the company might need to raise fresh cash after a series of profits warnings. MacLellan, the support services group chaired by the small companies maestro Bob Morton, ticked 0.5p higher to 79.5p after unveiling a 84 per cent jump in first-half profits to £1.7m.

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