FTSE rallies on base metal prices

Monday, 21 June 2010 11:09

By myfinances.co.uk staff

The FTSE 100 Index climbed 56.41 points, or 1.1 per cent, to 5,307.25 in early trading with stocks rallying the most in two weeks after China signaled an end to the yuan's fixed rate to the dollar, sparking a surge in basic-resource producers.

The People's Bank of China said on June 19th it will end a two-year currency peg adopted during the global financial crisis to protect exporters, a sign policy makers see the world economy strengthening.

Kazakhmys gained 3.9 per cent to 1,241p, helping to send a gauge of mining shares to a near three-month high. Vedanta, India's largest copper producer, increased 5.5 per cent to 2,459p and Rio Tinto Group, the world's third-largest mining company, increased 5.4 per cent to 3,504p.

Copper jumped, leading a rally in base metals, as the dollar weakened against most of its major counterparts.

Man Group, the largest publicly traded hedge-fund firm, rose 1.6 per cent to 252.3p as Credit Suisse raised its 2011 earnings forecast for the company by 11% and increased its price estimate for the shares by 5.7 per cent to 280p.

Bank of America Merrill Lynch Global Research cut its price objective for Man Group's shares by 1.4 per cent to 355p. That's still 43% above last week's closing price.

BP retreated 3.1 per cent to 346.5p as the company said the cost of its response to the worst oil spill in US history accelerated to reach $2 billion.

BP is seeking to raise $50 billion to cover the cost of the oil spill, according to the Sunday Times. The first $10 billion may come from a bond sale this week and the company is talking to banks to get a $20 billion loan, the newspaper said. The remaining $20 billion would come from asset sales over two years, it said.

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