Relief for miners as China props up its markets

Beijing calmed the nerves of the market

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The biggest mining companies traded in London were among the beneficiaries yesterday as China put a temporary halt to its stock market rout and metal prices rebounded.

Glencore, which was also helped by a broker upgrade, Rio Tinto, BHP Billiton and Anglo American all rose as Chinese markets rallied for a second day.

After a month of turmoil triggered a 30 per cent fall in just three weeks, the key Shanghai Composite index jumped  4.5 per cent yesterday, building on a 5.8 per cent gain the day before .

Beijing, which has banned big shareholders from selling over the next three months, waded into the market to buy up shares through brokers. 

That has calmed the nerves of the market, as well as fears that a sharp blow will be dealt to China’s resource-hungry economy. Copper – which is often seen as a proxy measure for Chinese growth– hit a six-year low of $5,240 a tonne on Wednesday, but has since recovered to about $5,580.

Iron ore for Chinese delivery bounced 3 per cent to $49.90 a tonne, according to The Steel Index, having dropped by 11 per cent on Wednesday to its lowest level since the index started tracking prices in 2008. 

Analysts, however, warned yesterday that it was still too early to reach a definitive conclusion on the long-term impact of Beijing’s support measures.

As well as the state-sponsored stock buying, more than 1,300 companies  – half of the stocks listed on the country’s exchanges in Shanghai and Shenzhen –have suspended trading in their shares this week. This has helped curb the ability of the markets – and the benchmark indices – to tumble.

Beijing’s measures also helped the Hong Kong stock market yesterday, with the Hang Seng index ending the day up 2 per cent, although it was still down 4.5 per cent on the week.

Retail investors hit by the rout are, however, set to rein in spending. China’s national association of  car makers slashed its forecasts for sales growth this year from 7 per cent to just 3 per cent after a poor first half.