Sector movers: Metals, mining stocks get respite as China, Greece woes ease

Mining, metals and real estate investment trusts led the London market higher on Monday, as fears of a Greek default eased along with China’s aggressive intervention, to arrest its equities market decline, took effect.

The blue chip FTSE 100 index closed 0.97% or 64.57 points higher at 6737.95 with industrial metals and mining stocks back in the green. Past the midway point in trading, three-month futures contracts of primary aluminium (up 0.8%), copper (up 0.08%), lead (up 2.2%), nickel (up 2.3%), tin (up 1.5%) and zinc (up 1.7%) on the London Metals Exchange were in the green.

It catapulted industrial metals (up 2.80%) and mining (up 1.95%) indices higher. Blue chips Anglo American (up 1.76%), Antofagasta (up 1.52%), BHP Billiton (up 2.08%), Rio Tinto (up 2.40%) and Glencore (up 2.18%) were seen clawing back some of the previous week’s losses.

Kaz Minerals (up 1.10%), Acacia Mining (up 0.77%) and Evraz (up 2.80%) were among other notable names to finish higher. However, Centamin (down 2.16%), Lonmin (down 9.15%) and Vedanta Resources (down 1.54%) ended lower, going against the wider sector theme.

Analysts at Barclays and Macquarie opined that despite Monday’s uptick, sector fundamentals remained weak as a Chinese economic correction continues, with problems ahead for copper, iron ore and tin producers in particular.

Elsewhere, real estate investment trusts (up 1.38%) also notched gains with Shaftesbury (up 3.85%) leading the way, followed by rivals Great Portland Estates (up 2.95%), British Land (up 1.70%) and Land Securities (up 1.24%) into positive territory.

Going the other way, tobacco (down 0.20%), and oil and gas (down 0.13%) indices were among the only ones to end the session lower, albeit marginally. British American Tobacco was down 0.26% or 9.5p at 3,617p while Imperial Tobacco was down 2p or 0.06% at 3,258.00p, with traders indulged in a bit of profit-taking from high yield stocks as worries over Greece appeared to subside.

Oil and gas stocks generally traded lower with crude oil benchmarks in the red with Brent staying below the $60 per barrel level factored in by several industry players for capital expenditure planning. Blue chips Shell (‘a’ shares down 0.22% / ‘b’ shares down 0.46%) and BG Group (down 0.88%) were in the red, however rival BP was trading up 0.42% at 428.80p.

A notable footnote to sector proceedings was provided by Nostrum Oil (down 0.67%), which made a further approach to Tethys Petroleum regarding a possible offer the entire company. The possible offer price, whether in cash or shares, of C$0.2185 for the dually-listed company represented a premium of 46% over Tethys' closing share price on the Toronto Stock Exchange as of 9 July.

As part of the transaction Nostrum is willing to extend interim funding to Tethys even before any shareholder vote takes place. The news sent Tethys' London-listed shares up by 24.19% or 1.88p to end the session at 9.62p.