UPDATE 1-Stellar gains for miners and weak sterling send FTSE 100 surging

  • Reuters
  • Stock Market News
UPDATE 1-Stellar gains for miners and weak sterling send FTSE 100 surging
Credit: © Reuters.

* FTSE 100 up 1.3 pct

* Miners enjoy stellar gains as metals prices surge

* Start of Q1 earnings season lifts sentiment

* UK inflation lower than expected

* Hammerson drops Intu Properties deal

(Updates prices, adds details)

By Julien Ponthus and Helen Reid

LONDON, April 18 (Reuters) - Surging mining stocks and a fall in the pound boosted Britain's FTSE 100 on Wednesday, with metals prices climbing on supply concerns and data showing an unexpected dip in inflation.

The index of top UK companies .FTSE jumped up 1.3 percent to 7,317.34 points, strongly outperforming other European bourses thanks to the weaker pound and its heavy weighting in commodities stocks.

Miners were the biggest gainers, driven up by continuing aluminium price strength after U.S. sanctions on Russian producer Rusal 0486.HK sparked concerns of a supply bottleneck in metals markets.

Nickel had its biggest one-day gain since the financial crisis, and aluminium prices hit their highest point in nearly seven years. biggest miners Anglo American AAL.L , BHP Billiton BLT.L , Rio Tinto RIO.L and Glencore GLEN.L all surged by between 5.4 and 7.7 percent.

Shares in Russian gold and silver producer Polymetal POLYP.L , which had been hit by worries over the U.S. sanctions, jumped 12 percent after the firm reported a 19 percent jump in first-quarter revenue. Mining HOCM.L rose 6.8 percent after its first-quarter production report, and Evraz EVRE.L , Fresnillo FRES.L and Randgold Resources RRS.L also made gains.

Europe's index of basic resources stocks .SXPP enjoyed its best day since November 2016, up 4.3 percent.

Strong crude prices also helped drive oil majors BP BP.L and Royal Dutch Shell RDSa.L higher, after sources said Saudi Arabia wants to see crude closer to $100 a barrel. Brent crude futures LCOc1 were up $1.54 at $73.12 by 11:14 EDT (1514 GMT) weaker sterling also supported the FTSE. The currency fell back after data showed British inflation cooled unexpectedly to a one-year low in March, raising doubts over whether the Bank of England would indeed raise interest rates in May.

Sterling's surge to pre-Brexit vote levels has reduced the forex-related lift enjoyed by foreign currency-earning FTSE 100 companies after sterling's slump in the aftermath of Britain's June 2016 vote to leave the European Union.

M&A news and results caught investors' attention.

Worries over the UK retail market drove shopping centre operator Hammerson HMSO.L to pull out of its bid to take over smaller rival Intu Properties INTUP.L . shares rose 4.2 percent on the news while Intu Properties slid 4.1 percent.

"Hammerson pulling out of its £3.5 billion bid for rival Intu Properties is quite a sensible move, particularly since some bigger shareholders were expressing disquiet about the deal," said CMC Markets analyst Michael Hewson.

He added that risks to the UK retail property sector are becoming more of a concern.

Jupiter Fund Management JUP.L shares fell 4.6 percent after the asset manager suffered 1.3 billion pounds ($1.86 billion) of net outflows in the first quarter. now needs to regain momentum in its net flows before the market recognises any value emerging in its share price," Jefferies analysts said in a note.

Mediclinic MDCM.L shares jumped 9.2 percent, among top FTSE gainers, after the international private healthcare provider said it saw strong revenue growth in its Middle East division. the small-cap segment, De La Rue DLAR.L , the company that makes British passports, lost 4.4 percent after abandoning its appeal against Britain's decision to award the contract for the new blue passports to a foreign business. British government confirmed, after markets closed, that it had awarded the new contract to Dutch firm Gemalto GTO.AS .

Crematorium operator Dignity DTY.L jumped 11.2 percent after reporting first-quarter figures which showed more customers opted for premium funeral packages.

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