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LONDON – British shares rose on Wednesday after positive trade data from China improved market sentiment, pushing oil and metals prices higher and lifting investors’ appetite for shares in mining and oil and gas companies.

Data from China overnight showed that exports and imports in December fell much less than expected after the country allowed the yuan currency to depreciate sharply.

This helped the price of copper rebound off near six-year lows, with mining stocks Anglo American, Glencore and Rio Tinto gaining between about three and six percent.

Anglo American was also buoyed by news of its selling its Middle East tarmac interests to Colas.

Also in the commodities sector, oil majors BP and Royal Dutch Shell gained 3.2 and 2.8 percent respectively, with the price of oil rising for the first time in eight days, pulling away from the $30-per-barrel level breached in the previous session.

BP added more than 7 points to the index, while Royal Dutch Shell contributed 5.8 points.
“We’re being driven higher by those stocks which are used traditionally as a proxy for negativity in China,” Charles Hanover Investments advisory investment manager, Jonathan Roy, said. Investors were now unwinding short positions in the stocks, he said.

Britain’s blue-chip FTSE 100 index, which nudged over the 6,000-level for the first time in three sessions, rose 1.3 percent to 6,003.83 points by 0938 GMT, and looked set for its biggest daily gain in three weeks.

“(The) 6,000 level on the FTSE is a key psychological level. When we dip beneath it and selling continues, a lot of market participants … do get that notion the world’s going to end,” Roy said.

Drugmaker Shire was also among the top risers, up 4 percent after its chief executive said that the company could achieve much higher cost savings from its planned $32 billion acquisition of Baxalta than previously expected.

Among the decliners, Bunzl, which distributes non-food products to businesses, fell 0.5 percent after Goldman Sachs cut its rating on the stock to “sell”.

Goldman said the stock was trading like a bond proxy given the company’s relatively stable business model and resilient margins, although valuations were now stretched and at risk from rising interest rates.
Reuters

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