By Carla Mozee, MarketWatch FTSE 100 cruises to its fifth
consecutive weekly gain
LONDON (MarketWatch) -- U.K. stocks soared to their best level
in two months Friday, with mining companies among the biggest
advancers after China's central bank cut interest rates.
The People's Bank of China unexpectedly, and for the first time
in two years, cut lending rates. The move came amid concerns that
the world's second-largest economy (if not the largest) could miss
its annual growth target of around 7.5%. Recent economic data has
indicated slowing in the Chinese economy, with the key property
sector suffering further declines in prices.
Investors sent U.K. mining stocks sharply higher after the PBOC
move, as China is one of the most eager commodities consumers.
Anglo American PLC jumped 6.7%, Rio Tinto PLC (RIO) leapt 6.2%, BHP
Billiton PLC (BHP) surged 5% and Antofagasta PLC tacked on
4.8%.
The basic materials group pushed up 4.9%, the best-performing
sector on the FTSE 100 .
"The impact of China's move is a classic play of boosting global
equities, commodities and their currencies, reinforcing our
preferred play of shorting [the euro] and the pound versus the
Canadian dollar," said Ashraf Laidi, chief global strategist at
City Index, in a note Friday.
The FTSE 100 rose 1.1% to 6,750.76, its highest close since late
September, according to FactSet data. The British benchmark ended
the week up 1.5%, the fifth consecutive weekly advance.
Stocks had gained earlier in the session after European Central
Bank President Mario Draghi signaled the ECB is set to expand its
asset-purchase programs if inflation remains persistently low.
"We will continue to meet our responsibility -- we will do what
we must to raise inflation and inflation expectations as fast as
possible, as our price stability mandate requires of us," Draghi
told a banking conference in Frankfurt on Friday.
The ECB later Friday said it officially had begun purchasing
asset-backed securities.
Other advancers on Friday included Tullow Oil PLC , whose shares
rose 5.8%. The oil-exploration company's shares are up more than 6%
for the week, reflecting speculation that OPEC may agree to cut
output at its meeting next week, in an effort to stem the recent
slide in oil prices.
Shares of Rolls-Royce Holdings PLC climbed 1.1% as the company
said it won a $5 billion order from Delta Air Lines (DAL) to make
engines and provide support for 50 new aircraft. Rolls-Royce's
Trent XWB engines will power 25 Airbus A350s, and its Trent 7000
engines will power 25 Airbus A330neo aircraft.
On the FTSE 250 index, shares of Serco Group PLC dropped 5%
after the outsourcing firm's rating at Credit Suisse was cut to
underperform from neutral. After Serco last week unveiled
significant contract provisions and the risk of more to come,
analyst Karl Green wrote in a Friday not that he sees "huge
uncertainty around the operational cash flows of the business."
In other developments, the populist U.K. Independence Party, or
UKIP, won its second seat in the U.K. parliament on Thursday, a
blow to Prime Minister David Cameron's Conservative Party ahead of
the general election next year. UKIP is an advocate of the U.K.'s
exit from the European Union. The pound (GBPUSD) on Friday was
buying $1.5677, down from $1.5693 on Thursday.
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