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FTSE steadies near 2-month high, miners advance
September 2, 2014 / 12:25 PM / 3 years ago

FTSE steadies near 2-month high, miners advance

* FTSE 100 index steadies after hitting 2-mth high

* Weir Group boosted by Credit Suisse upgrade

* Caution ahead of ECB policy meeting on Thursday

By Atul Prakash

LONDON, Sept 2 (Reuters) - Britain’s top share index steadied after touching a two-month high on Tuesday, with some nervousness before Thursday’s European Central Bank meeting eclipsing a rally in miners, which tracked stronger metals.

The UK mining index rose 1.2 percent, the top sectoral gainer, as zinc rose to a four-week high and aluminium neared an 18-month peak on increased fund buying. Rio Tinto, BHP Billiton and Antofagasta shares rose by between 1 and 1.3 percent.

However, the blue-chip FTSE 100 index was down 0.08 percent at 6,819.72 points by 1138 GMT after climbing as high as 6,849.28, the highest level since early July, with some caution about what message the ECB would give on Thursday.

ECB President Mario Draghi’s dovish speech last month at a meeting of central bankers had raised expectations the bank was preparing more stimulus measures, but sources within the bank said last week any new action was unlikely, although not impossible, and the barrier to quantitative easing was still “very high”.

“There is some nervousness, but we don’t expect the ECB to add to the stimulus programme this time around. However, anaemic economic growth and poor lending conditions would suggest we wouldn’t have to wait for too long,” Henk Potts, equity strategist at Barclays, said.

“In the short term, there is potential for the stock market to witness increased volatility and nervousness, but an improving business environment will help equities to push higher in the medium- to longer-term.”

The FTSE 100 reached a peak of 6,894.88 points in mid-May, its highest in more than 14 years. But it has not yet passed the 6,900 point mark, considered a major hurdle before it can challenge record highs around 7,000 points.

With Scotland set to vote on independence this month, investors are watching the polls with interest although most see only marginal exposure for UK stocks.

Support for Scottish independence rose sharply in August, a poll showed on Monday, leaving the “Yes” campaign just six points behind advocates of staying in the United Kingdom. The poll is the first to show a substantial shift in opinion since two television debates.

Among sharp movers, Weir Group rose 2.6 percent, with traders citing the impact of a Credit Suisse recommendation upgrade to “outperform” from “neutral”, as it downgraded engineering peer IMI to “neutral” from “outperform”.

“Our end market analysis suggests that 66 percent of Weir end markets could offer scope for positive surprise versus 0 percent for IMI,” Credit Suisse analysts said in a note.

IMI shares slipped 0.6 percent. (Additional reporting by Tricia Wright; Editing by Ruth Pitchford)

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