FTSE steadies at the close as commodity stocks rally

LONDON (Reuters) - Britain’s top share index steadied at the close on Wednesday, recovering after early losses on the back of a rally in commodity stocks following a sharp rise in prices of industrial metals and oil.

A man shelters under an umbrella as he walks past the London Stock Exchange in London, Britain August 24, 2015. REUTERS/Suzanne Plunkett

The UK mining .FTNMX1770 and oil and gas .FTNMX0530 indexes climbed 3.2 percent and 1.5 percent respectively, after metals prices gained on higher Chinese imports and hopes for output cuts, while crude oil prices advanced following lower crude storage figures from the United States.

Glencore GLEN.L, Rio Tinto RIO.L, BHP Billiton BLT.L, BG Group BG.L and Royal Dutch Shell RDSa.L rose from 1.5 percent to 4.6 percent.

However, Anglo American AAL.L was down 1.2 percent after hitting a new record low as several brokers cut their targets on the stock following the company's decision on Tuesday to suspend dividends and restructure its business.

“The market finally managed to bounce back after mining and energy shares fought back, supported by stronger commodity prices. Some brave investors are taking positive bets on commodity stocks as both the sectors have become technically ‘oversold’,” Jawaid Afsar, senior trader at Securequity, said.

The blue-chip FTSE 100 index .FTSE closed 0.1 percent weaker at 6,126.68 points after falling to 6,101.22 points earlier in the day. It fell 1.4 percent in the previous session to its lowest level in nearly a month.

The market was also supported by a sharp rally in shares of industrial equipment hire group Ashtead AHT.L. The stock rose 8.6 percent, the top gainer in the FTSE 100 index, buoyed by its strong results.

The company said it expected full-year results to beat forecasts after posting a 21 percent rise in pretax profit for the first half of its fiscal year. It also announced an increase in dividends.

“The interim dividend is up 33 percent, with the prospect of more good news for investors as the group now expects its full- year figures to be ahead of previous forecasts,” Russ Mould, Investment Director at AJ Bell, said in a note.

Among mid-caps, Stagecoach SGC.L was set for its biggest decline in seven years, down 14.4 percent.

The British rail and bus operator said people had avoided travel to big cities since the militant attacks in Paris in mid-November, forcing it to “modestly” downgrade its annual earnings forecast.

Editing by Tom Heneghan