Sector movers: Resource stocks extend recovery run

Resource stocks continued their recovery run on Thursday, but both headline indices ended up on a negative turf at the close of market proceedings in London.

The FTSE 100 ended 0.72% or 42.74 points lower at 5,918.23, while the FTSE 250 ended down 1.69% or 282.50 points at 16,413.27. Oil and selected metal futures posted modest upticks during late afternoon trading.

At 1707 GMT, the Brent front-month futures contract was up 1.68% or 51 cents to $30.82 per barrel, while WTI rose 2.40% or 0.73 to $31.21, extending its premium to the global proxy benchmark achieved overnight.

Base metals also performed better with most futures contracts in positive territory on the London Metal Exchange. The three-month delivery futures contracts of copper (up 0.8%), primary aluminium (up 1.4%), lead (up 0.7%), nickel (up 4.2%) and zinc (up 1.7%) were trading higher just ahead of the LME close, but tin (down 0.3%) went against the trend.

Unsurprisingly, resource stocks continued their upward momentum. Anglo American (up 13.61%), Glencore (up 9.39%), BHP Billiton (up 6.04%) and BP (up 3.53%) were among the biggest gainers on the FTSE 100.

The FTSE 250 roster of gainers had a similar theme with Vedanta Resources (up 7.88%), Tullow Oil (up 7.68%), Amec Foster Wheeler (up 5.28%) and Cairn Energy (up 5.03%) among the biggest midcap gainers.

However, the story of the session belonged to supermarket leader Tesco (up 6.13%), after it reported an impressive like-for-like (LFL) sales improvement over the Christmas period. Group LFL sales bounced back with a 2.1% rise in the six weeks to 9 January, with the UK LFLs climbing 1.3% as the prior year's three '£5 off £40' national coupon campaign was abandoned.

Home Retail reversed earlier declines after saying its full year profit is expected to come in at the lower end of expectations as Argos sales over the festive period dipped.

InterContinental Hotels Group (down 7.19%) came under pressure after a series of bomb blasts rocked Jakarta.

A Canadian and an Indonesian were killed, and a number of people wounded by the explosions, which happened at a number of locations including a shopping centre near the presidential palace and UN offices. IHG has nine hotels in the Indonesian capital.

Elsewhere, Merlin Entertainments (down 5.37%) took a hit after JP Morgan Cazenove downgraded the company’s rating from ‘neutral’ to ‘underweight’ on valuation grounds.