The US broker argued that the commodities industry is about to enter a "super cycle", driven by demand from the fast-growing Chinese economy. It believes this boom will generate impressive earnings growth in the mining industry for years to come.
According to Citigroup's analysis, past "super cycles" have been propelled by the rapid economic development of a certain part of the world. So in the 1900s it was the industrialisation of the US that drove commodities demand and mining sector profits, while in the 1950s it was the post- war reconstruction of Europe, and the 1970s boom was a led by Japan's economic renaissance.
Now it's China's turn and the broker tips iron ore, coking coal, aluminium, zinc and gold as the commodities that are most likely to benefit from this great leap forward by the Far Eastern country. Among Citigroup's favourite mining stocks are BHP Billiton, Rio Tinto and Antofagasta.
The FTSE 100 closed 53.9 points better at 4,906.2, the blue-chip index's highest level since October 2002. Elsewhere, the FTSE 250 hit an all- time high of 7,225.4, a climb of 59.2 points on the day. The mid-cap index, launched in October 1992, has been a great performer over the past two years, rising in value by 78 per cent compared with a 36 per cent increase by the FTSE 100. It contains the 250 largest companies in the UK outside the FTSE 100.
Meanwhile, City dealing rooms were once again alight with takeover stories. Exel registered the biggest share price move on the back of the speculation, gaining 72p to 873p, as traders bet on a takeover of the company by either Deutsche Post or America's UPS. Such was the demand for Exel stock that early in the session it traded at 900p.
Those who bet on bid situations once again talked of a move by Nippon Sheet Glass on Pilkington, up 1p to 120p. The Japanese company controls 20 per cent of the St Helen's-based company. Bizarrely, there were was also suggestions in some quarters of the Square Mile that Baugur, the Icelandic retailer that is in the process of buying Big Food Group, has now set its sights on J Sainsbury, 3p better at 286p.
Before investors get too excited about this rumour it is worth noting that Sainsbury's is in a different league to Baugur's acquisitions so far. To buy the supermarket giant, and that presumes that the family Sainsbury's family is willing to sell its 30 per cent shareholding, would cost more than pounds 6bn and analysts are sceptical that the Icelandic group has the firepower for such a deal. They believe Somerfield, off 2p to 156p, is a much more likely target for Baugur.
Smith & Nephew added 12p to 531p after strong fourth-quarter results from its US peer Zimmer. The news raised hopes that S&N's full-year results tomorrow will also impress the market. Dresdner Kleinwort Wasserstein reckons the numbers from the UK group will make pleasant reading for investors. It is convinced that S&N, along with Zimmer, has been taking market share from their rivals Stryker, Biomet and Johnson & Johnson. As it stands, the City forecasts S&N to deliver pre-tax profits of between pounds 275m and pounds 280m for the year just gone.
Northern Rock, off 4.5p to 779p, was undermined by a bearish note from Williams de Broe. Urging investors to sell the mortgage bank, the broker said it was nervous about the prospects at the group in the medium term and set a price target of just 509p on the stock.
Ulster TV ticked 7.5p to 493.5p on hopes that the broadcaster will soon be bought by either ITV or a US group. Erinaceous rose 3p to 226.5p on suggestions that the group's recent acquisition of Hercules Property has been a success and that brokers will soon have to upgrade their cautious earning forecasts.
In the small cap world, Voller Energy, a manufacturer of portable fuel cell system, had its maiden session on AIM. The company raised pounds 10m at 74p and saw its stock at 77p which values the group at more than pounds 17m. Voller will use the cash to further develop and market its various products.
Finally, punters should keep an eye on bioFusion today. The biotech group is set to debut on the market having raised pounds 8.2m at 150p. BioFusion was formed in 2002 to exploit university-generated intellectual property rights and has signed a 10-year deal with Sheffield University to commercialise its life sciences research.