Mining stocks drive Footsie higher as investors shrug off Spain's downgrade

FTSE: 5,466.36 (+62.98) Mid-250: 10,338.51 (+107.99) Small Cap: 2,824.32 (+22.27): EQUITIES IN London moved higher yesterday as investors dismissed a Spanish sovereign debt downgrade and as miners rose on hopes that China will be forced to stop its cycle of interest rate rises.

Fears that high inflation in China would be met by further interest rate rises by Beijing were muted after yesterday’s data showed that consumer prices eased to an annual 6.1 per cent in September.

Although few analysts expected any loosening of policy, most now expected the People’s Bank to remain on hold after recent data showing growth appeared to be slowing.

After early losses, the mining sector was higher by mid afternoon as Wall Street opened strongly following better than expected retail sales.

Anglo American added 2.4 per cent to £23.62, while Eurasian Natural Resources climbed 1.5 per cent to 662½p. Silver miner Fresnillo jumped 1.9 per cent to £16.60.

The FTSE 100 ended 63 points higher, or 1.1 per cent, to 5,466.36.

Banks mostly overturned early losses, recovering their poise after Thursday’s weaker session in the wake of downgrades to Lloyds Banking and Royal Bank of Scotland by rating agency Fitch.

Lloyds fell a further 3 per cent to 33.25p, while RBS gained 0.4 per cent to 24.26p. Barclays, which was placed on “negative watch” by Fitch, climbed 1.7 per cent to 176.05p.

“After equities paused for breath during Thursday’s session and the EFSF expansion plans now ratified by Slovakia, the anticipation seems to be that we’ll see the grind higher continue,” said Cameron Peacock at IG Markets.

On the mid-cap FTSE 250, Jupiter Fund Management was up 9 per cent to 224.4p after it reported it attracted £300 million of new customer cash in the third quarter.

Hargreaves Lansdown, the FTSE 100-listed asset manager, earlier this week reported a robust performance in the face of falling equity markets.

There were also bid rumours floating around dealing rooms that a US bank was looking to buy Man.

Man shares climbed 5.1 per cent to 157.6p, while Hargreaves Lansdown was up 2.2 per cent to 511p and Ashmore gained 3.1 per cent to 327.8p. – (Copyright The Financial Times Limited 2011)