Sector movers: Miners find a bid despite US dollar strength

Commodity-related stocks were on the front foot at the start of the week, buoyed by the release of data in China that some analysts suggested might show that the authorities had "switched stance" and that the country's central bank had been leaning on the country's banks to lend more.

Overnight, the People's Bank of China said that the rate of growth in the country's money supply, as measured by the M2 monetary aggregate, had picked-up from 8.0% for June to 8.5% in July (consensus: 8.0%).

The rate of increase in new yuan loans on the other hand slipped, Freya Beamish at Pantheon Macroeconomics pointed out, although she said the decline was entirely due to seasonal effects and in any case less than the consensus had expected.

Nonetheless, broader measures of money supply appeared to indicate that authorities continued to clamp-down on so-called 'shadow financing' and pointed to a sustained slowdown in economic growth in year-over-year terms well into the next year, Beamish said.

Those figures were helping to offset broad US dollar strength in the market on Monday - which were weighing on gold and copper - as fresh weakness in the Turkish lira continued to reverberate across global capital markets.

The US dollar spot index hit a new 52-week high of 96.5220 at the start of the session, although as of 1415 BST it had pared its gains, falling back to 96.27, after Turkey's central bank said that all options were on the table to restore stability in its capital markets.

In turn, COMEX gold futures for delivery in December were down by 0.84% to $1,208.90/oz., with three-month LME copper dipping to $6,122 per metric tonne.

As well, some analysts, such as those at SP Angel, spied a buying opportunity on the back of the dislocations in markets in the wake of the slide in the lira.

Dollar-earning miners would in fact benefit from the drop in the value of local currencies.

"UK pension funds are naturally short of US dollar earnings despite the FTSE"100 being inclined towards overseas earners and will want to own more Miners and Oil & Gas producers to support their portfolios," they said.

In particular, they liked Rio Tinto and BHP for their exposure to the Australian dollar, iron ore and coal.

They also expressed a preference for Glencore due to the strength of its tradng business, together with ongoing growth in its core mining business (despite problems with Dan Gertler and the US DoJ).

Top performing sectors so far today

Insurance (non-life) 3,238.13 +1.94%

Oil Equipment, Services & Distribution 14,341.30 +1.46%

Fixed Line Telecommunications 2,611.09 +0.53%

Mining 17,613.20 +0.30%

Oil & Gas Producers 9,382.16 +0.25%

Bottom performing sectors so far today

General Retailers 2,434.89 -1.46%

Real Estate Investment & Services 2,681.37 -1.17%

Real Estate Investment Trusts 3,054.39 -1.17%

Forestry & Paper 24,169.85 -1.15%

Travel & Leisure 9,982.90 -0.95%