Monday, September 02 09:35:05
UK blue chips bounced back today as strong Chinese factory data lifted mining stocks and telecoms firm Vodafone was boosted by expectations of an imminent deal to sell its U.S. wireless business.
A delay in potential U.S. military action against Syria, as President Barack Obama sought a Congressional vote, also helped boost appetite for equities, which depend on global economic conditions, even though oil stocks underperformed as crude prices eased.
Mining stocks rose 2.5 percent as data showed factories in China, the world's largest consumer of metals, had their best growth in months in August, helped by domestic demand.
Miner Vedanta, up 3.5 percent, was the top riser on the FTSE 100, which was up 86.9 points, or 1.4 percent to 6,499.79 points at 0737 GMT, more than recouping last week's loss.
"The fact that China is still growing and it looks like it's on the road to recovery will suit the miners massively," said Mark Priest, senior trader at ETX Capital.
"The (Congressional) vote in the U.S. looks pretty good (for the market) as the FTSE has been kept down by the fear of a reprisal with Syria and while that's not on the horizon, certainly not this week, people are taking advantage."
The mining sector has fallen 6.1 percent since mid-August as investors positioned for a reduction in U.S. monetary stimulus, which had fuelled rises metal prices in the past year.
But gains may be short lived as the sector still traded at a two-year high valuation multiple of 12.3 times its expected earnings for the following 12 months after analysts slashed their earnings estimates in light of falling metal prices in recent months.
Vodafone, up 3.5 percent, added 13.8 points the FTSE as the telecoms group and its U.S. partner Verizon Communications were expected to announce a $130 billion deal that will give the U.S. firm complete control of Verizon Wireless, subject to final board approval, people familiar with the matter said.
The agreement would give Vodafone a war chest of cash to reward shareholders and potentially carry out acquisitions to strengthen the group's European and emerging market operations.
Energy stocks knocked 3 points off the FTSE as a delayed U.S. decision on a Syria attack lowered expectations of a conflict in the oil rich Middle East.
Trading volume was expected to remain thin on Monday as the U.S. stock market, the world's largest, was shut for a national holiday. ( C ) Reuters