Chinese cash move boosts miners

MINING and banking stocks jostled for the top positions in the Footsie yesterday, fired up by China releasing more cash to lend to businesses and six central banks coming together to boost access to the dollar.

In a surprise move, Beijing cut the reserve requirement ratio for its commercial lenders for the first time in nearly three years to shore up the world’s second-largest economy, which is expanding at its lowest pace since 2009. China is also the world’s biggest metals user and so the cut is likely to boost demand, helping mining stocks in London.

South American copper miner Antofagasta topped the Footsie risers’ board, up 100p at 1,184p, a rise of 9.2 per cent.

Banks had been in the red during the morning session, buffeted by a sector-wide downgrade from credit ratings agency Standard & Poor’s on Tuesday night.

But news that six central banks – in the UK, US, the eurozone, China, Japan and Switzerland – were going to make it easier for banks to obtain dollars and thus lend money to each other lifted financial stocks

Lloyds Banking Group was ahead by 7.1 per cent, or 1.6p, at 24.8p, Royal Bank of Scotland was 1.5p or 7.5 per cent higher at 20.99p and Barclays rose 6.7 per cent or 11p to 180.2p.

Angus Campbell, head of sales at Capital Spreads, said: “Investors piled back into equities faster than you can say ‘return of the bull market’ as the prospect of fresh, cheap cash being injected into money markets made equities look sexy again when less than a week ago they were far from that.

“It was a good day to be a bull and this rally sets us in good stead for a possible continuation into the year end. As we head into December, historically a very bullish time of year for equity markets, you can tell there’s a sense of optimism amongst investors and a shift in sentiment for the better.”

The pound was boosted by the central bank action and rose to $1.57 against the dollar, but sterling was down against the euro at €1.16, as the single currency was buoyed by renewed optimism on the continent.

Edinburgh-based oil explorer Cairn Energy was one of just five fallers in the FTSE 100 after it reported more disappointing results from its drilling in Greenland. Cairn shares closed 2.7p lower at 272.3p, a drop of just under 1 per cent, having hit an intra-day low of 258.8p

The firm said it had failed to find oil in two more wells, following the closure of three other wells earlier this year.

Shares in accounting software firm Sage were 15.1p higher at 290.1p after it increased its dividend by 25 per cent and full-year results showed an 8 per cent rise in profits to £352.6 million.

But infrastructure services firm Mouchel slumped by a further 30 per cent or 5.3p to 12.25p after it reported full-year losses of £65m and warned short-term prospects looked challenging.

It has secured new banking arrangements but lenders will be entitled to 5 per cent of Mouchel’s shares and fees ranging from £2.3m to £10.3m.

Pub operator and Pedigree brewer Marston’s rose after it said it will create 1,000 jobs next year by opening 25 pubs. Shares were up 2.5 per cent, or 2.3p, to close at 95.8p.