Sector movers: Chinese data stokes buying in mining stocks, Kaz rockets

Miners and grocers vied for the top slot on the leaderboard on Tuesday with brokers weighing in with positive remarks on the former while the latter group received a boost in the form of a positive trading update from Morrison.

News that factory gate prices in China blew past forecasts in December - helped by higher industrial commodity prices - stoked fresh gains in metals' prices.

Producer prices in Asia's largest economy hit a five-year high of 5.5% (consensus: 4.6%), which was well above the previous month's reading of 3.3% year-on-year.

"A sharp increase in inflation at the start of 2017 may fuel speculation that rising price pressures will soon force the People’s Bank into more aggressive policy tightening. But we think the pick-up will mainly be driven by movements in commodity prices and is unlikely to be sustained," said Capital Economics's China economist Chang Lu.

Analysts at Danske Bank were of a similar view, telling clients: "PPI inflation should peak soon if our forecast of more moderate increases in commodity prices from here is realised. We expect policy rates to stay unchanged but de facto policy is already being tightened through higher money market rates."

As of 1751 GMT, March 2017 copper futures on COMEX were to be seen 2.97% higher to $2.6140 a pound.

"The Metals & Mining and Steel sector outperformed every other European sector in 2016 and we think it can perform well again in 2017 given forecasts of YoY growth in cash-flow, earnings and dividends," analysts at Citi chimed in.

"We think the mining sector is now back to a sufficient size that it cannot be ignored by fund managers," they added.

Against that backdrop, Kaz Minerals outperformed, boosted by a target price upgrade out of Canaccord Genuity from 155p to 475p.

Cannacord analysts Tim Huff and Nick Hatch also upgraded the shares to a 'buy'.

Huff and Hatch referenced "stronger production growth from Bozshakol (and potentially Aktogay), higher copper prices and a much improved cash generation profile to match revised maturities" as the triggers behind their positive target price revision.

For its part, Morrison reported that like-for-like sales excluding fuel grew by 2.9% over the nine weeks to 1 January which, if nothing untoward happened in the rest of the month, would represent the fifth consecutive quarter of growth on that metric.

Top performing sectors so far today
Mining 15,895.83 +4.36%
Food & Drug Retailers 3,197.42 +4.29%
Industrial Metals & Mining 2,160.21 +1.92%
General Industrials 5,806.37 +1.90%
Aerospace and Defence 4,714.28 +1.57%

Bottom performing sectors so far today
Insurance (non-life) 2,700.54 -1.45%
Gas, Water & Multiutilities 5,944.46 -1.29%
Electricity 9,116.92 -0.52%
Software & Computer Services 1,897.70 -0.46%
Food Producers & Processors 7,846.52 -0.39%