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LONDON (Alliance News) - A slump in the mining sector Tuesday afternoon meant UK equities only managed to end marginally higher, reversing most of the gains made earlier in the day on the back of dovish comments by US Federal Reserve Chair Janet Yellen on Monday.

Anglo American, down 3.1%, Glencore down 2.4% and Antofagasta, down 2.2% were the worst performers in the FTSE 100 as copper prices tumbled.

"A plunge in copper prices is at odds with the oil rally and making traders a little nervous after the big run-up mining shares have had in the last week. Copper futures sunk over 3% after the biggest two-day increase in copper stockpiles monitored by the LME since 2004," said Jasper Lawler, market analyst at CMC Markets.

The mining sector was the best-performing sector on Monday as a fall in the dollar, in the wake of the weak US jobs data on Friday, supported commodity prices.

The FTSE 100 closed up 0.2%, or 11.13 points at 6,284.53. The blue-chip index had reached a high of 6,322.60 after reacting positively to Fed Chair Yellen's speech on Monday, in which she omitted her recent assessment that interest rate hikes were likely in the coming months.

It was the Fed Chair's first speech following Friday's weak US jobs report, which she described as "disappointing".

"Although this recent labour market report was, on balance, concerning, let me emphasize that one should never attach too much significance to any single monthly report," Yellen said.

"That said, the monthly labour market report is an important economic indicator, and so we will need to watch labour market developments carefully," she added.

The FTSE 250 index ended up 0.1%, or 13.62 points, to 17,195.38 and the AIM All-Share closed up 0.1%, or 1.05 points, at 744.39.

European indices outperformed London. The CAC 40 in Paris ended up 1.2% and the DAX 30 in Frankfurt ended up 1.7%.

The euro area economy grew more than previously estimated in the first quarter, boosted by household spending, according to data from Eurostat. Gross domestic product climbed 0.6% sequentially, instead of 0.5% estimated on May 13. This was also faster than the 0.4% growth registered in the fourth quarter of 2015.

On a yearly basis, GDP growth held steady at 1.7% in the first three months of 2016, revised up from 1.5%.

The expenditure-side breakdown of GDP showed that sequential growth in household spending rose to 0.6% from 0.3%. Meanwhile, government expenditure climbed at a slightly slower pace of 0.4%.

At the European stock market close, the euro traded the dollar at USD1.1347, lower than the USD1.1361 seen at the close on Monday.

On Wall Street at the end of London equity trade, the Dow 30 and the S&P 500 were both up 0.4% and the Nasdaq Composite was up 0.1%.

The pound regained the ground it lost on Monday when three polls gave the Leave campaign a lead over Remain ahead of the UK's referendum on EU membership on June 23.

On Tuesday, sterling moved back higher after two polls found the Remain campaign slightly ahead. A poll by ORB on behalf of The Daily Telegraph showed the Remain camp's lead had narrowed to only one percentage point, having been ahead five points when the poll was conducted a week earlier.

The ORB poll had Remain on 48%, against 47% for Leave. This compares to 51% saying they would vote to remain a week earlier, against 46% for Leave.

But a YouGov telephone poll for The Times showed the Remain camp on 43%, against 42% for Leave. In contrast to the ORB poll, this was a gain for the Remain campaign, which had been on 41% in the previous telephone poll by YouGov a week earlier, against 43% for Leave.

The YouGov telephone poll is in line with a general pattern whereby telephone polling tends to favour the Remain camp, while online polling has tipped toward the Leave cause.

At the London close, the pound traded the dollar at USD1.4570, compared to USD1.4461 at the same time on Monday.

Investec said Lloyds Banking Group would enjoy the strongest bounce on the day after the UK's referendum on EU membership, if it results in a vote to remain in the European Union.

Analyst Ian Gordon said he assumes that any "Bremain bounce" will be short-lived, but he believes Lloyds and Royal Bank of Scotland Group will be the main beneficiaries in the event of a vote for the UK to stay in the EU. Lloyds closed the day up 0.9%, while RBS ended down 1.4%.

Leading the FTSE 100 risers was Royal Dutch Shell, with 'A' shares up 3.2% and 'B' shares up 3.1%. The oil major said it will spend the rest of the decade reshaping the business following the completion of the acquisition of BG Group earlier this year as it outlined plans to restructure its production portfolio, cap investment and make deeper cuts to costs in a move that analysts believe has reassured investors.

Shell's immediate priority is to use cashflow to pay down its debt after the significant rise caused by the BG deal followed by its second priority, dividends. Beyond that, Shell plans to strike a balance between capital investment and share buybacks.

Although Shell made it clear that payouts are a priority, some may remain concerned as Shell has only guaranteed to maintain the dividend of USD1.88 per share in 2016 and has not committed to a payout in 2017 - but analysts think the board is unlikely to become the first at the helm of Shell to cut the dividend since the Second World War, especially after completing the largest corporate transaction in Shell's history.

Some analysts suggested potential for Shell to make a U-turn on its USD25.00 billion share buyback programme it plans to launch in 2017 in order to preserve the dividend, but the programme is still set to go ahead.

"Shell's messages at the capital markets day were sensible and reassuring, portraying a visible path to its target of growing per-share free cash flow and returns," said Irene Himona, analyst at Societe Generale.

Shell shares also were benefiting from a rise in oil prices, which reached their highest levels of the year so far. The North Sea benchmark touched a high of USD51.28 a barrel, and traded at USD51.10 at the London close. At the corresponding time on Monday, Brent was USD50.54 a barrel.

US benchmark West Texas Intermediate also reached its highest level of 2016 at USD50.32 a barrel. Higher oil prices helped to lift BP, up 1.3%, Tullow Oil, up 4.6% and Cairn Energy, up 2.4%. At the London close Tuesday, gold traded at USD1,241.18 an ounce, easing from the USD1,246.45 at the close Monday.

Sports Direct International was in focus as founder Mike Ashley faced questions from the UK parliament's Business, Skills & Innovation committee, following press reports late last year which criticised the working practices at the Sports Direct's Shirebrook warehouse.

Ashley defended the working practices of the sports clothing and equipment retailer, but suggested the FTSE 250 sporting goods retailer may have outgrown his own ability to manage it.

Before the committee, Ashley said the review into practices at Shirebrook was "ongoing", adding some of the issues discovered in the company's internal probe were an "unpleasant surprise". He said it was "unacceptable" the company would dock workers 15 minutes' pay if they were one minute late for their shift, one of the concerns which had been cited in The Guardian's investigation. Ashley added he "did not know" who implemented the 15-minute rule or when it came into force. Sports Direct shares ended up 3.8%.

In the economic calendar for Tuesday, the focus will be on Asia before the London open, with Japanese GDP and trade balances data at 0050 BST, and Chinese trade data expected early Tuesday.

After the London open, UK industrial and manufacturing production are at 0930 BST and US mortgage applications is at 1200 BST. In the afternoon, there are US JOLTS job openings and the National Institute of Economic and Social Research's UK GDP estimate both at 1500 BST and EIA crude oil stocks at 1530 BST.

In the UK corporate releases, there are trading statements from supermarket J Sainsbury, books, stationery and magazines retailer WH Smith, and fashion retailer Boohoo.com. Online domestic appliances retailer AO World reports full-year results, as do flexible office space provider Workspace Group, marketing communications group Creston and online financial trading provider CMC Markets.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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