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Miners help FTSE to rebound after four days of losses

Published 15/06/2016, 17:05
© Reuters. People walk through the lobby of the London Stock Exchange in London
UK100
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By Kit Rees and Atul Prakash

LONDON (Reuters) - Britain's top share index rebounded on Wednesday as a rally in metals prices following a weaker dollar boosted basic resources stocks, although house builders came under pressure ahead of a vote on the country's European Union membership.

The UK mining index (FTNMX1770) surged 4.3 percent after falling sharply in the previous sessions as prices of major industrial metals such as copper , aluminium and nickel rose 1.1 to 2.6 percent following a weaker dollar that made metals cheaper for holders of other currencies.

Shares in Glencore (L:GLEN), Anglo American (L:AAL), BHP Billiton (L:BLT), Antofagasta (L:ANTO) and Rio Tinto (L:RIO) - the top five gainers in the benchmark FTSE 100 index (FTSE) - rose 3.9 to 6.5 percent.

"Miners seem to have temporarily bottomed out after recent sell-offs and further out performance may be seen in the coming days due to their international focus," Jawaid Afsar, senior trader at Securequity, said.

"However a 'Brexit' will hit the entire UK stock market, including miners, in the near term. Investors might position in the coming days based on poll headlines."

Opinion polls have in the past few days shown unexpectedly strong support for leaving the European Union in a June 23 referendum, a step that could rock the EU, test the unity of the United Kingdom and unleash turmoil on global financial markets.

House builders underperformed the broader market on concerns that if Britons vote to leave the union, the housing sector would be hit hard.

Berkeley (L:BKGH) fell 1.2 percent, also after reporting a 20 percent drop in reservations of new homes at the start of the year, while Taylor Wimpey (L:TW) was 1.4 percent.

The blue-chip FTSE 100 index closed 0.7 percent higher at 5,966.80 points after falling in the previous four sessions to its lowest level since late February on Tuesday.

Outside of the blue chips, mid-cap Jimmy Choo (L:CHOO) soared 13.8 percent following a well-received update.

"Today’s Q1 update suggests that the Jimmy Choo brand is showing resilience in a difficult market," Tom Gadsby, analyst at Liberum, said. Liberum upgraded its rating on the stock to "buy" from "hold" .

© Reuters. People walk through the lobby of the London Stock Exchange in London

Software maker Aveva Group (L:AVV), however, slumped 12 percent after ending preliminary deal talks with Schneider Electric (PA:SCHN).

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