Resource stocks fuel rally as Footsie advances after three-day slide

FTSE: 5,095.30 (+54.54) Mid-250: 9,854.78 (+95.72) Small Cap: 2,917.06 (+0.96): UK STOCKS rose yesterday, snapping a three-day losing streak, as gains in basic resources shares fuelled by rising metals prices offset growing concern that global economic recovery is stalling.

The FTSE 100 rose 1.1 per cent in London.

“You’ve got the gold and silver play coming in,” said Will Hedden, a sales trader at IG Index in London.

“Petrofac also is gaining and those sectors are pulling up peers. It looks like a relief rally,” he said.

More than $7 trillion has been wiped off global equity markets since July 26th as Europe’s debt crisis spilled into Italy and Spain and the US had its credit rating cut by SP.

German chancellor Angela Merkel attempted to shut the door on common euro-area bonds as a means to solve the debt crisis, saying that she will not let financial markets dictate policy. Speaking in an interview with ZDF television from the chancellery in Berlin on Sunday, she said bringing in euro bonds at this time would further undermine economic stability.

Randgold, a miner of the metal in West Africa, advanced 3.9 per cent to 6,870p.

Fresnillo, the world’s largest primary silver producer, added 3.5 per cent to 2,039p.

Gold rallied for a sixth day to an all-time high.

Petrofac gained 3.7 per cent to 1,211p.

Energy shares gained amid speculation the civil war in Libya may be drawing to a close. Stocks including Royal Dutch Shell gained after rebel fighters reached the capital Tripoli. Shell increased 1.9 per cent to 1,919p.

IG climbed 4 per cent to 409.4p after the owner of the IG Index financial spread-betting brand said sales for the first quarter may increase by 19 per cent as more people place bets because of recent market swings.

ICAP, the world’s largest broker of trades between banks, gained 3.8 per cent to 425p.

Amlin lost 3.8 per cent to 310.5p. The biggest Lloyd’s of London insurer by market value swung to a loss of £151.7 million in the first half after record claims from natural disasters in Japan, New Zealand and Australia.

Micro Focus International slid 3.4 per cent to 254p after the company said it terminated talks with possible bidders.

Essar Energy retreated 3.8 per cent to 247.9p. – (Bloomberg)