UK mining index hits three-month high on China data

Wed Feb 12, 2014 4:19am EST

* UK mining index hits 3-month high, up 0.8 pct

* FTSE 100 rises 0.2 pct, gains for 6th straight session

* Morrison up on report family gauge buyout firms interest

By Atul Prakash

LONDON, Feb 12 (Reuters) - Rising shares in mining companies, lifted by robust data from China, helped the UK mining index hit a three-month high on Wednesday, while WM Morrison rose on a report that its founding family was considering taking the retailer private.

The UK mining index rose 0.8 percent to the top of the sectoral gainers' list after figures showed that the value of overall imports and exports in China, the world's second-largest economy, rose around 10 percent last month.

Miner Anglo American was up 1.3 percent, Diversified global miner BHP Billiton advanced 1 percent and Vedanta Resources was up 0.8 percent.

"Economic data from China is providing a lift to the mining sector, easing fears with regards to a potential slowdown in commodity demand," Keith Bowman, equity analyst at Hargreaves Lansdown, said.

"The health of the Chinese economy remains an important factor for the FTSE 100 index, with the mining sector still highly weighted," he added.

The UK mining index, which touched its highest level since early November, helped the blue-chip FTSE 100 index rise for a sixth straight session to a two-week high. The index was up 0.2 percent at 6,682.63 points by 0902 GMT.

WM Morrison Supermarkets, which rose 3.3 percent on a Bloomberg report, citing people with knowledge of the matter, that the founding family had contacted private-equity funds to weigh their interest in taking the retailer private.

"In an increasingly tough sector Morrison continues to struggle. A possible return to private ownership will potentially allow a more major overhaul of the company away from the constant gaze of shareholders," Bowman said.

Investors remained cautious ahead of an inflation report at 1030 GMT. Focus will be on Bank of England Governor Mark Carney, who will try to come up with a more credible commitment to keep rates at a record low, after the Bank's previous guidance was overtaken by a plunge in British unemployment.

The FTSE 100 index has rebounded from its December lows, which have acted as the springboard for a decent bounce.

"The chart shows that this move has lifted the FTSE back above its 50-day moving average and the short-term outlook remains encouraging, with most indicators pointing towards further upside," Bill McNamara, technical analyst at Charles Stanley, said, adding the next upside target for the index was 6,750 points.