Banks and mining stocks fuel rally as Footsie rebounds from 13-month low

FTSE: 5,168.24 (+161.08) Mid-250: 10,139.74 (+248.78) Small Cap: 2,944.03 (+48.17): UK STOCKS climbed the most since May 2010 yesterday, with the benchmark FTSE 100 rebounding from a 13-month low, as mining companies advanced.

The FTSE 100 gained 3.1 per cent in London.

It had fallen 16 per cent from the beginning of July through yesterday, wiping more than $566 billion from the value of UK shares, on speculation that Europe will fail to contain its sovereign-debt crisis and that the US economic recovery is faltering.

“I’ve been putting money to work, gently,” said Piers Hillier, chief investment officer at Liverpool Victoria Asset Management.

“Incrementally adding here is a sensible thing,” he said.

BHP Billiton, the world’s largest mining company, gained 5.4 per cent to 1,966p as aluminium, copper, lead, nickel, tin and zinc rallied in London.

Aquarius Platinum gained 8.6 per cent to 235.6p. The miner of platinum and palladium in South Africa and Zimbabwe reported full-year underlying earnings that exceeded analysts’ estimates.

Hays gained 3.9 per cent to 75.5p. The stock was upgraded to “buy” from “neutral” at UBS and raised to “neutral” from “underweight” at HSBC.

Anglo Pacific rallied 8.9 per cent to 280p after posting record first-half royalty income of £16.4 million, compared with £15.7 million a year earlier. The company increased its interim dividend by 7.6 per cent to 4.25p a share.

Gold, however, slid back from record highs as investors cashed in some of the previous session’s near 3 per cent gains, weighed by a move by CME to hike margins for trading gold futures in an attempt to arrest their strength.

Randgold Resources was the only FTSE 100 faller, shedding 3.1 per cent after recent gains.

Away from the top two sectors, ARM jumped 6.4 per cent, boosted by a Goldman Sachs upgrade and as technical issues in New York benefited from reassuring revenue forecasts from Cisco Systems .

Barclays was the top blue-chip gainer, jumping 8.6 per cent, recouping a similar-sized fall on Wednesday as bargain hunters poured in to support the stock.

Banking heavyweight HSBC also lent the sector its strength, rising 3.8 per cent, while emerging markets focused Standard Chartered put on 2.6 per cent. – (Bloomberg/Reuters)