Miners lead charge on commodity gains as banks get broker boost

FTSE 100:5,939 (+57.88) Mid-250:11,959 (+117.79) Small Cap:3,271 (+20.51)

UK STOCKS climbed for a fourth day, led by a rally in mining companies and banks amid signs that Chinese demand for copper is picking up and as Citigroup Inc upgraded European lenders.

Xstrata, Antofagasta and Rio Tinto all rose at least 2 per cent as copper premiums in China, the world’s largest user, rose to a seven-month high.

Lloyds and Royal Bank of Scotland both rallied more than 2 per cent. Burberry gained 2.4 per cent amid a report the retailer is planning to list in Hong Kong.

The FTSE 100 Index rose 1 per cent to close at 5,938.87 for the longest stretch of gains since March. Even so, the benchmark measure fell 0.2 per cent this week. The gauge has lost 2.2 per cent so far this month amid a commodity slump and concern Europe’s debt crisis will derail the economic recovery.

Xstrata, the world’s fourth-largest copper producer, gained 2 per cent to 1,423.5 pence, Antofagasta, which owns copper mines in Chile, increased 4.3 per cent to 1,312 pence and Rio Tinto, the world’s third-largest mining company, advanced 2.9 per cent to 4,267 pence. Copper rebounded in London, advancing as much as 2.4 per cent to $9,238 (€6,479) a metric tonne on the London Metal Exchange.

Lloyds jumped 2.8 per cent to 52.8 pence, RBS rallied 3.4 per cent to 42.2 pence and Barclays climbed 1.5 per cent to 275.3 pence.

Citigroup raised its recommendation for European banks to “overweight”, citing the drop in share prices over the last three months as an opportunity to increase holdings in “stronger” firms. Analysts at Société Générale said in a report that UK banks were in “better shape than you think”.

Separately, the Financial Times reported that banks in the European Union could avoid part of the globally agreed new Basel III capital requirements under draft EU legislation implementing the standards. The newspaper cited unnamed people who have seen the draft.

Essar Energy surged 5.3 per cent to 451.3 pence after analysts at Deutsche Bank AG reiterated their “buy” recommendation saying they see 25 per cent upside potential in the stock. EasyJet jumped 3.1 per cent to 361 pence as Europe’s second-biggest discount airline was raised to “buy” from “hold” at Royal Bank of Scotland. – (Bloomberg)