Speculative bets help UK miners to outperform, FTSE steady

Fri Feb 7, 2014 4:37am EST

* UK mining shares outperform broader market

* FTSE 100 steady after sharp gains on Thursday

* Shire slips after poor results of a trial

By Atul Prakash

LONDON, Feb 7 (Reuters) - London-listed mining stocks rose for a fourth straight session to a two-week high on Friday, with investors betting that a strong reading of U.S. jobs data could improve sentiment and the demand outlook for raw materials.

The UK mining index was up 0.6 percent by 0917 GMT, outperforming a steady blue-chip FTSE 100 index, which rose 1.6 percent in the previous session to record its best daily gain in seven months.

"The markets are jittery as there are still fears that the emerging markets unwinding may have further to go," Tim Whitehead, investment manager at Redmayne-Bentley, said.

"Today's market is driven by speculative positioning ahead of the U.S. numbers. If you want to take a stance on the market and go into the higher beta sectors like miners and your call is right, you will get twice the return on the general level of the index," he added.

Some investors are betting that U.S. non-farm payrolls numbers, due at 1230 GMT, will also be encouraging after data showed on Thursday the number of Americans filing new claims for unemployment benefits fell more than expected last week.

According to a Reuters Survey of economists, U.S. jobs are expected to have increased by 185,000 last month. If the data comes in line or better that predictions, it would offer some assurance to investors that the pace of economic recovery in the world's biggest economy is not faltering and global demand for metals will improve.

The UK mining sector is headed for its second straight week of gains. The index is up 1 percent for the year after falling 16 percent in 2013.

In contrast, the broader FTSE 100 index is down 2.8 percent so far in 2014 after surging 14 percent last year.

Gains in miners were offset by the UK pharmaceuticals and biotechnology index, which fell 0.7 percent, dragged down by a 1.3 percent drop in Shire after Vyvanse, its top-selling medicine for hyperactivity, failed in two late-stage clinical trials.

Among sharp individual movers, British sweetener maker Tate & Lyle rose 2 percent, helped by an upgrade by JP Morgan to "overweight" from "underweight" and a hike in its target price for the stock to 900 pence from 735 pence.