Market Report: Antofagasta leads the way on day of miner victories

A surprise loosening of the reins by China on its monetary policy meant the heavyweight diggers were back in demand last night. As the country's central bank dropped the amount of cash lenders must keep in reserve for the first time in nearly three years, the blue-chip miners stormed ahead, with Antofagasta leading the charge.

The Chilean copper group powered up 100p to 1,184p to take the top spot on the benchmark index, while Kazakhmys – up 56.5p to 925p and Xstrata – up 62p to 1,017p – were not far behind. The sector has been particularly sensitive to China's attempts to dampen inflation by increasing the bank reserve ratio, as well as interest rates, but the switch in tactics suggests it is also prepared to tackle growth concerns.

Yet there were some voices suggesting the move was a cynical attempt to distract investors from China's latest PMI numbers, which were due to be released late last night, amid talk they could come in worse than expected.

Still, the news helped the FTSE 100 in what turned out to be a session of two halves. In early trading it dipped before an intraday swing of roughly 5 per cent saw it shoot up 168.42 points to 5,505.42, dramatically cutting the top-tier index's losses over November – yet another volatile month – to under 40 points.

As well as Beijing's announcement and strong jobs figures from the US, punters were also persuaded to rediscover their risk appetite after a number of central banks – including the Bank of England and the US Federal Reserve – revealed a surprise agreement to provide liquidity to the banking system.

The joint attempt moved the UK banks higher after they were initially in the red following a number of ratings downgrades across the sector from Standard & Poor's. Royal Bank of Scotland increased by 1.47p to 20.99p while Lloyds advanced 1.64p to 24.82p and Barclays was pushed up 11.25p to 180.25p, despite all three having their ratings cut.

There were just five blue-chip losers by the bell, including Cairn Energy. Following rumours last week of imminent bad news from its controversial Greenland drilling campaign, the oil explorer admitted two more of its Arctic wells had been plugged and abandoned, and it was pegged back 2.7p to 272.3p as a result.

Reckitt Benckiser was another missing out on the rally, with the Cillit Bang manufacturer managing to creep up only 19p to 3,219p. The consumer goods giant – whose other brands include Gaviscon and Durex – was knocked by its deputy chairman, Peter Harf, selling nearly £13.5m of shares.

Amec edged up only 2p to 868.5p despite being picked out by HSBC as one of its favourite UK stocks in a generally bullish note on the oil services sector. The broker's analysts also singled out its mid-tier peers Lamprell (10.1p stronger at 281.2p) and Hunting (27p stronger at 689p), saying the latter had been recently "transformed".

Down on the FTSE 250, the rumour mill continued to turn, as Go-Ahead became the latest to be touted by City gossips as a possible bid target. The vague takeover speculation mentioned no names, while dealers were rather sceptical over the idea.

The bus company was still driven up 29p to 1,219p, however, though it did receive a push from Espirito Santo's Gerald Khoo. In his first look at the transport group, the analyst gave it a "buy" recommendation and a 1,550p price target, praising it as a "relatively safe haven in an uncertain economic environment".

Mr Khoo was also positive on Stagecoach and National Express, rating both as a "buy" as they were lifted 5.7p to 250.7p and 4p to 210p respectively. He was less optimistic over FirstGroup thanks to fears around its North America school bus business, though it still bumped up 12.1p to 326.3p.

There was some rare good news for AEA Technology after it revealed it had managed both to appoint an interim chief executive and agree fresh banking covenants. The troubled climate-change consultancy – which two weeks ago announced its second profits warning in just seven months – managed to add 40 per cent to close at 0.7p on the fledgling index.

On the Alternative Investment Market, Panmure Gordon admitted it would fail to turn a full-year profit thanks to the recent market turbulence, as it slumped 18.52 per cent to 11p.

Love will be in the air after Christmas, according to Numis Securities' Ivor Jones, who said it would boost the dating website Cupid as a result. The analyst argued that as "people's thoughts turn to relationships" in the aftermath of the festive season, the group – which soared up 21.75p to 207p – will be able to take advantage thanks to online advertising being particularly cheap at that time of year.

Comments