* FTSE 100 up 0.5 pct
* Mining stocks rise after upbeat China data
* FTSE starts Q3 well after uninspiring first half
* Tesco, Morrison fall as Kantar survey shows sales drop
By Francesco Canepa
LONDON, July 1 Britain's top share index started
the second half of the year on a positive note, towed higher by
mining stocks after fresh data pointed to continuing demand from
China, the world's biggest metals consumer.
Mining and industrial metals
stocks rose 2 percent each, the top sectoral gainers, after
public and private surveys from China showed government policy
was helping to support demand in the economy.
Resilient Chinese demand helped to push copper to its
highest in nearly four months earlier on Tuesday, helping global
miners such as Rio Tinto and BHP Billiton gain
nearly 3 percent each.
"We believe that returns to shareholders will come through
as 2014 progresses," Jeremy Batstone-Carr, market analyst at
Charles Stanley, said.
"If investors are piling in to bet on this, then perhaps the
FTSE 100 will have a better performance in the third quarter
than it has had so far this year."
The FTSE 350 mining index ended the first half of the year
up by a meagre 0.5 percent while the industrial metal index fell
21 percent, the worst performing sector in Britain. Both were
hit by a continued fall in the price of metals such as iron ore
Copper accounted for 12 percent of Rio's and 22 percent of
BHP Billiton's revenues last year, with iron ore the largest
revenue source for both companies. Iron ore prices are still
down 30 percent from their end-2013 level, leading some traders
to express caution on mining stocks.
"Short term momentum may see further upside in copper...but
we think the underlying equities have too many headwinds to
rally much further from present levels," a trader in London
"With iron ore still very weak and with copper such a
relative small part of the large diversified names...the miners
will run out of steam."
Precious metal miners such as Randgold and Fresnillo
were also strong gainers, after gold hit a three month
high as escalating violence in Iraq boosted its safe-haven
The FTSE 100 was up 30.35 points, or 0.5 percent, at
6,774.29 points, tipping the index into slightly positive
territory for the year on the first day of the third quarter.
The 0.4 percent gain for the index so far in 2014 compares
poorly to a 4.2 percent gain for euro zone blue chips, which
have benefited as the European Central Bank moves to ease policy
just as the Bank of England considers tightening it.
The FTSE 100 is nearly 2 percent off its 2014 peak of
6,894.88 in May, which marked its highest since December 1999.
Morrisons was the top FTSE faller, down 1.8 percent,
as data by Kantar Worldpanel showed sales at the supermarket
fell 3.8 percent in the 12 weeks to June 22. Tesco,
whose sales fell 1.9 percent, saw its shares dip 1.2 percent.
(Additional reporting by Alistair Smout; Editing by Foo Yun