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Commodity strength lifts FTSE again

Published 07/06/2016, 09:58
Updated 07/06/2016, 10:00
© Reuters.  Commodity strength lifts FTSE again
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By Alistair Smout

LONDON (Reuters) - Commodity-related stocks rose again to give Britain's top share index a lift on Tuesday, after the market took heart from signs that the U.S. Federal Reserve would likely delay interest rate rises in the face of weak data.

Britain's FTSE 100 index (FTSE) rose 44.11 points, or 0.7 percent, to 6,317.51, taking its rise over the previous three sessions to more than 2 percent.

Mining, energy and financial stocks combined to add around 35 points to the index as growth-sensitive stocks received a lift from Fed Chair Janet Yellen's latest speech.

While she gave a largely upbeat assessment of the U.S. economic outlook and said interest rate hikes are coming, she gave little sense of when, and after weak jobs data on Friday, investors were ruling out a rate hike later this month.

The speech buoyed Wall Street, pushing the S&P 500 (SPX) to its best close of the year.

"Given the poor data set, she appears to be giving a clear signal to the market that with Brexit worries and the recent poor data, a rate hike looks off the cards for June," said Ana Thaker, Market Economist at PhillipCapital UK.

The latest polls on Britain's June 23 referendum on EU membership gave a slight edge to the "In" campaign. That sent sterling higher and actually resulted in the FTSE underperforming European shares.

A stronger pound means that FTSE companies with international exposure earn lower profits, and makes UK stocks more expensive for foreign investors.

The FTSE 350 Mining sector rose 1 percent to touch its highest level since early May, as copper remained near a 4-week high.

Oil prices also held near 7-month peaks, helping oil and gas shares (FTNMX0530) to their highest levels in three weeks.

Top riser on the FTSE 100 was Royal Dutch Shell (L:RDSa), up 2.7 percent after a strategy update that was welcomed by analysts.

Shell will pull out of its oil and gas operations in up to 10 countries in a drive to deepen cost cuts and narrow its focus following its $54 billion acquisition of BG Group.

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