* FTSE 100 up 0.6 pct
* Mining stocks rise after upbeat China data
* FTSE starts Q3 well after uninspiring first half
* Tesco, Morrison fall as Kantar data 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, boosted by
mining stocks after fresh data pointed to continuing demand from
China, the world's biggest metals consumer.
Poor sales data, however, pummelled British supermarkets
Morrisons and Tesco, which were among top FTSE
Mining stocks rose 2.2 percent, the top
sectoral gainers, after public and private surveys from China
showed government policy was helping to support demand in the
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."
Miners account for 10 percent of the FTSE 100 index. The
sectoral FTSE 350 mining index ended the first half of the year
up by a meagre 0.5 percent, capped by a continued fall in the
price of metals such as iron ore and copper.
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
relatively 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 41.3 points, or 0.6 percent, at
6,785.26 points at 1327 GMT, tipping the index into slightly
positive territory for the year on the first day of the third
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 2.4 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 percent.
Sainsbury's sales were up 3 percent while hard
discounters continued to make gains, with Asda's sales up 3.6
"Morrison's trading does not yet seem to have responded to
price cuts albeit the strategy feels better whilst Tesco's
momentum remains worrying given its store refurbishment
programme," Clive Black, an analyst at Shore Capital, said.
"We welcome Sainsbury's share gains, so long or neutral
Sainsbury and short Tesco would be one (pair trade) for us."
(Additional reporting by Alistair Smout; Editing by Foo Yun
Chee and Jon Boyle)