Sector movers: Metals uptick sends mining stocks higher

The London market ended marginally in positive territory on Thursday, with mining stocks bouncing back on stronger metal prices.

The FTSE 100 ended a mere 0.88% or 55.49 points higher at 6,393.13, while the FTSE 250 ended up 0.61% or 105.09 points higher at 17,216.40, with US markets closed for Thanksgiving.

Metal futures extended gains as three-month delivery contracts of primary aluminium (up 2.5%), nickel (up 1.7%), zinc (up 1.6%), tin (up 1.2%) and lead (up 1.2%) posted decent gains on the London Metal Exchange.

While the copper contract continued to trade at historic lows, it too registered a 1.2% gain to $4,627.50 per metric tonne at 1635 GMT. The rally came as Chinese regulators considered a request from the China Nonferrous Metals Industry Association to investigate short selling in domestic metal contracts amid the slump in prices, Bloomberg said.

Liz Grant, senior account executive at Sucden Financial, said, “LME prices were on the upward path from the opening of the overnight Asian session as the short covering rally gained further traction.

“Calls from the China Nonferrous Metals Industry Association for government support to help them with the current low price conditions and the possibility of formal investigations by the regulator into “malicious” short selling in local exchanges prompted the sharp move seen in early trading.

“During the London trading day, prices retreated from the earlier highs but remained in positive territory and in good volume. The short covering naturally led to slightly tighter borrowing rates particularly in the case of copper.”

Precious metals also saw marginal upticks with COMEX gold futures up 0.07% or 60 cents to $1,070.30 an ounce, while spot gold rose 0.11% or $1.26 to $1,072.38 an ounce. COMEX silver was up 0.67% or ten cents to $14.27 an ounce, while spot platinum was up 0.98% to $852.53 an ounce.

As a consequence, the top five FTSE 100 gainers came from the mining sector. Glencore (up 5.85%) led way, with Anglo American (up 4.46%), Fresnillo (up 3.96%), Antofagasta (up 3.79%) and Randgold Resources (up 3.11%) not far behind, while Kaz Minerals (up 8.73%) was the standout gainer on the FTSE 250.

The exception was BHP Billiton which slid 2.38% as a United Nations investigation concluded that waste from the tailings burst at the Samarco mine in Brazil is toxic and that measures taken by the group and its partner Vale to prevent any damage being done were “clearly insufficient”. However, the company denied the claims.