Market Report: Miners lord it as copper and platinum spike up

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The Independent Online

Strong commodities took the miners to the top of the FTSE 100 index yesterday.

Lower inventories and more power cuts at South African mines prompted a spike in the price of copper and platinum which, in turn, lifted companies such as Vedanta, which climbed 6.8 per cent to 2,022p, and Lonmin, which, despite its extensive South African operations, climbed 6.25 per cent to 3,300p. Other miners also gained, including BHP Billiton, up 4.9 per cent to 1,555p, Rio Tinto, up 5.4 per cent to 5,523p, and Anglo American, up 4.7 per cent to 3,061p.

The sector-wide rally also helped lift Xstrata, which firmed 0.4 per cent to 3,819p despite reports suggesting that it had spurned a £40-per-share indicative offer from Vale, its Brazilian suitor. Most in the market were unsurprised by the news, noting that, if Vale had indeed made the approach at the price claimed, it was always likely to be rejected. One trader said that "unless [Vale] goes above £40, it would not get anywhere with Glencore," Xstrata's biggest shareholder.

The wind behind commodities, coupled with some positive news from across the pond, that the billionaire investor Warren Buffett was coming to the aid of troubled bond insurers, helped the FTSE 100 climb 3.5 per cent to 5,910.

The blue-chip index was also helped by inflation figures, which the Office for National Statistics said rose by 2.2 per cent last month, lower than most economists' forecasts of 2.3 per cent. The CPI data lifted investor sentiment, and helped the FTSE 250 climb by 3.1 per cent, to 10,040.20.

The CPI also boosted retail and house-building stocks. The Bank of England has repeatedly stressed the importance of balancing any reduction in the base rate against its concern for inflation, worrying investors who are keen for further easing of UK monetary policy.

Lower-than-expected inflation fuelled their hopes, and they piled into the big high-street names. By the close, positive sentiment had helped lift Woolworths, up 2.13 per cent to 12p, Debenhams, up 3.69 per cent to 70.25p, Home Retail Group, which rose by 3.22 per cent to 272.50p, and Marks & Spencer, which was up 1.2 per cent to 420p.

Among house builders, Taylor Wimpey bounced back with a 5.9p gain to 177.9p. Bellway rose 57.5p to 776p, Barratt Developments climbed 23.25p to 402p, and Bovis Homes put on 36p to 589.5p. The good mood among builders also extended to Persimmon, up 31p at 745.5p, and Redrow, which gained 13p to 280.75p.

Elsewhere, GlaxoSmithKline was higher after suffering from weak investor sentiment recently. GSK shares rose 36p to 1,120p as investors decided it had been oversold.

Similar sentiment helped lift Standard Chartered, which had suffered after problems with its Whistlejacket structured investment vehicle. Its shares rose 82p to 1,602p.

Among the small caps, Oxford Biomedica was buffeted by bid rumours for a second day. The company headed towards the top of the risers' board, up 13.7 per cent, as investors continued to speculate about a possible offer from Sanofi-Aventis.

Analysts at Investec, while noting that "much of the value on which the share price is driven remains circumstantial", said that the prospective suitor would have to pay a "significant" premium to gain control of the company. Despite adding that, for now at least, "Sanofi would be better off waiting", Investec's remarks helped the surge, which took Oxford Biomedica's shares to 27p, up 3.25p.

Shares in TT Electronics, which will supply speed sensors for Tata's new mass-market Nano car, came up close behind Oxford Biomedica, at sixth place on the FTSE Small Cap index, rising 10.6 per cent to 91.25p.

On AIM, the supplier of loyalty card systems Universe Group gained 2.27 per cent to 5.625p after publishing a positive pre-close statement.

The e-learning and compliance courseware company Intellego got a boost after saying that Copia, its newly acquired subsidiary, had won contracts with a high-street pharmacy and beauty store, and a leading mobile phone operator. The news took the company's shares up by 7.69 per cent to 1.50p.

The biopharmaceutical company Lipoxen also had a good day after saying the US had granted one of its "cornerstone" patents. The announcement follows similar developments in Europe, and sent Lipoxen's share price up by 14.86 per cent to 21.25p.

The business-class only airline Silverjet slumped after news that rival Eos was ready to fly between New York, via Newark airport, and London from May. The company's shares were second from the bottom of the AIM All-Share index, losing 22.73 per cent to 17p.

Finally, Betbrokers, the specialist brokerage and clearing house, lost 11.76 per cent to 1.875p, despite being initiated at Daniel Stewart with a "buy" rating.

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