* FTSE 100 up 0.2 pct but on course for quarterly drop
* Babcock nearly recoups last week's losses
* Miners extend gains on China stimulus optimism
By Tricia Wright
LONDON, March 31 UK shares rose on Monday, led
by Babcock after a nuclear contract win and underpinned by
mining companies on hopes for stimulus measures in China. The
blue-chip index was still set for its first quarterly drop since
Babcock advanced 4.6 percent in brisk trade. The
engineering contractor and its U.S. peer Fluor were named
preferred bidders for a 14-year, 7 billion-pound ($11.7 billion)
contract to manage the decommissioning of Britain's nuclear
The stock's gains almost recouped its losses last week, when
Babcock announced a big rights issue to fund the acquisition of
helicopter firm Avincis.
"Positivity in the stock from what I call 'gold-plated
government contracts' (on account of both prestige and value)
should extend the share price to my six-month target of at least
1,550 pence," said Jordan Hiscott, a senior trader at Gekko
Global Markets. The shares are currently trading at 1,351 pence.
Trading volume in Babcock was almost four times its 90-day
daily average. Turnover for the UK benchmark as a whole was
around half the daily average.
Mining companies rose 0.9 percent. That took
their rally since their March 20 low to around 6 percent.
A string of weak economic data from China has led to
expectations the government will try to boost demand in the
world's largest metals consumer. The Chinese premier said last
week China could act to support infrastructure investment.
But the sector retreated from an intraday peak as copper
fell after hitting a two-week high earlier on Monday, The FTSE
100 index consequently slipped from an earlier two-week
high to trade up 11.03 points, or 0.2 percent, at 6,626.61
points by 1422 GMT.
"A bit of a bounce in the sector ... just on hopes that
commodity prices will get a fillip from the Chinese stimulus -
although actually metals prices haven't bounced as much as we
might have expected, which I think is why the markets are
generally just tailing off," said Matt Basi, head of sales
trading at CMC Markets.
"Until we've got further clarity on what's going to happen
... it's probably wise for people just to be a bit more cautious
and take a bit of money off the table."
Rio Tinto led the miners higher with a 2.4 percent
gain, as Credit Suisse reiterated the stock on its "focus" list.
"Potential for shareholder returns at Rio Tinto is larger
and could be sooner than any of its peer group including BHP,"
analysts at Credit Suisse wrote in a note.
The FTSE 100 index was still down almost 2 percent for the
year on the last day of the first quarter, set for its first
quarterly fall since last June. Concern over the economic impact
of tension between Russia and the West, as well as weaker data
from the United States and China, hit stocks early in the year.
"If you look at the sell-off we've had compared to all the
negative news we have, we would have seen a much worse sell-off
if there wasn't underlying strength in this market to start
with," IG's Madden said.
($1 = 0.6011 British Pounds)
(Additional reporting by Alistair Smout; Editing by Larry King)