By Sarah Turner
LONDON (Dow Jones)--Miners moved higher in London on Tuesday, as
gold futures headed back above $1,000 an ounce, with the move
guiding the top index back toward a key level.
Mining companies making gains included Rio Tinto (RTP), up 3.6%;
BHP Billiton (BHP), up 2.6%; and Anglo American , up 1.5%.
The move came as gold futures surged above $1,000 an ounce on
Tuesday, propelled by weakness in the U.S. dollar.
Gold for December delivery, the most active contract, rose $7 to
$1,003.70 an ounce. It's the first time a front-month contract has
traded above $1,000 since February.
The dollar continued to lose ground against the euro and
sterling, with the sterling up 1.2% at $1.6530 against the
greenback following some surprisingly strong manufacturing output
data.
"Increased risk appetite [has] dominated proceedings after the
weekend G20 meetings. Risk has also become more attractive due to
the return of M&A," said James Hughes, trader at CMC
Markets.
Bid target Cadbury rose another 0.4% to 786 pence on Tuesday,
extending sharp gains from Monday when Kraft Foods Inc. (KFT)
offered 745 pence a share to buy the chocolate maker.
"We think that, given the attractiveness of Cadbury as an asset,
other bidders such as Nestle/Hershey and PepsiCo may emerge," said
analysts at Investec Securities.
Overall, the U.K. FTSE 100 index closed up 0.3%, or 14.16
points, to 4,947.34 in the third straight day of gains for the
index.
Other European shares were also higher, as were U.S. stocks as
traders returned from a long holiday weekend.
Turning to telecoms, Vodafone Group (VOD) shares rose 1.7% in
the top index.
Rival Deutsche Telekom said Tuesday that it plans to merge its
T-Mobile U.K. division with France Telecom's (FTE) Orange U.K. unit
in a 50:50 joint venture that is expected to have a 37% share of
the U.K. mobile market.
"Consolidation in the U.K. is good news for all players.
Obviously the buyer gets the cost synergies, but all market
participants benefit from a more rational environment," said
analysts at Iberian Equities.
Meanwhile, shares of home-improvement retailer Kingfisher rose
0.5% after the firm rushed out "indicative" interim figures
following a leak on Monday afternoon.
Kingfisher said that it expects adjusted pretax profit in a
range of 285 million pounds ($466 million) to 290 million pounds
for the six months ended Aug. 1. A year earlier, the firm posted
adjusted pretax profit of 214 million pounds.
"We had expected first-half pretax profit of 'only' 271 million
pounds, up 27% on last year, so today's news is pleasing and is
driven by an approximate 20 million pound beat on B&Q profits,"
said Nick Bubb, analyst at Pali International.
Other retailers advancing in London included Marks & Spencer
, up 3.3%; Home Retail , up 0.7%; and Next , up 1.9%.
Barclays (BCS) shares declined 1.1%. The U.K. financial
regulator said Tuesday that it fined Barclays 2.45 million pounds
($4 million) for failing to provide accurate details on millions of
financial transactions.
InterContinental Hotels (IHG) rose 5.5% after Credit Suisse
upgraded the hotels operator to outperform from neutral, saying it
will benefit from a recovery in revenue per available room.
Whitbread extended Monday's rally with a 3.9% rise as Credit
Suisse also upgraded the Premier Inn and Costa Coffee operator.
Also outside the FTSE 100, shares of DS Smith climbed 12.7% as
the packaging group reported a better-than-anticipated start to the
fiscal first quarter after slower erosion in selling prices and a
faster reduction in operating costs.
It cautioned that it remains concerned about the level of demand
across the majority of its market sectors, and that input-cost
increases are above expectations, so it is too early to be certain
that this better first-quarter performance will be sustained for
the full year.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274