LONDON MARKET CLOSE: Mining Sector Star Performer In London Rally

LONDON (Alliance News) - London stock indices closed higher Tuesday on a choppy day of trading amid low volumes, with the mining sector leading the gainers on fresh hope for stimulus from the world's biggest metal consumer, China, in the new year.

The FTSE 100 index closed up 0.8% at 6,083.10 points and the FTSE 250 ended up 0.5% at 17,166.18, while the AIM All-Share index closed down 0.1% at 723.68.

London outperformed European equities. The CAC 40 in Paris closed up 0.1% and the DAX 30 in Frankfurt ended down 0.1%.

"Whilst the region had little to work with this Tuesday that appears to have only exacerbated the fears surrounding Spain's election results, fears that only sporadically took hold during yesterday's more positive trading landscape," said Connor Campbell, financial analyst at Spreadex.

On Wall Street, the DJIA and S&P 500 were both up 0.2% and the Nasdaq Composite was flat.

The gains came after the final reading of third quarter US GDP topped estimates. A report from the Commerce Department said real gross domestic product increased by 2.0% in the third quarter compared to the previously estimated 2.1% growth. The downward revision came ahead of expectations for a downward revision to 1.9%.

The dollar was supported following the data. At the London close the euro traded the dollar at USD1.0973, which was higher than USD1.0924 seen at the close on Monday. For the pound, however, it was a different story, as it touched its lowest level against the dollar for over eight months at USD1.4810. At the London close sterling traded at USD1.4814.

The pound had already lost ground against the dollar after the Office for National Statistics said the UK budget deficit widened by more than expected in November. Public sector net borrowing excluding public sector banks rose GBP1.3 billion from last year to GBP14.2 billion in November compared to economists' forecast for GBP11.0 billion. In October, the deficit totalled GBP7.4 billion.

The heavily weighted mining sector was again propping up the FTSE 100. Anglo American closed as the best performer, up 5.3%, Antofagasta closed up 4.7%, and Fresnillo ended up 2.7%.

The gains followed a report by Chinese news agency Xinhua on Monday which stated China's central government said its fiscal policy needs to be more forceful and its monetary policy more flexible to ensure economic growth stays in the proper range in 2016.

The Chinese government recently cut its annual economic growth target to 6.5% from 7.0%.

According to an official statement released by the government after the Central Economic Work Conference, current proactive fiscal policy needs to be more forceful by cutting taxes and raising the fiscal deficit ratio gradually,

The statement cited by Xinhua added that monetary policy needs to be more flexible to create appropriate monetary conditions for structural reforms and lower financial costs.

Asia-focused financial stocks Standard Chartered, up 2.0%, and Aberdeen Asset Management, up 1.8%, both closed amongst the best blue-chip performers as well.

Oil prices were closely watched throughout the session following its late decline on Monday, which dragged UK stocks into the red. The price of Brent oil stayed relatively stable above the USD36 a barrel mark Tuesday, causing the share price of oil majors to rise. Royal Dutch Shell 'A' closed up 3.1%, and BP closed up 2.9%, and BG Group closed up 2.7%.

At the London close Brent was quoted at USD36.39 a barrel, slightly higher than USD36.18 seen at the close Monday.

The price of gold eased from Monday and traded at USD1,075.90 an ounce on Tuesday, compared to USD1,079.20.

Marks & Spencer Group closed as the worst performers in the FTSE 100 index, down 1.1% to 442.90 pence after Nomura cut its price target to 585.00p from 600.00p, after data from Kantar Worldpanel pointed to weak UK clothing sales in November.

Nomura analyst Fraser Ramzan said the weakness was largely driven by milder November weather. The Japanese bank subsequently slashed its forecasts for third quarter general merchandise like-for-like sales for M&S. Nomura also cut its price target on Next, which ended down 0.4%.

ITV closed down 1.0%, giving up some of the gains made on Monday after the Mail on Sunday reported that executives from US media giant Comcast were considering a GBP11.0 billion bid for ITV.

However, US entertainment trade magazine Variety has since reported that the US media giant dismissed talk of a bid for the British broadcaster. "We don't comment on M&A rumours but the speculation on ITV is just completely inaccurate," spokesman John Demming told Variety.

In the economic calendar for Wednesday, the final reading of third quarter UK GDP is at 0930 GMT, as are UK total business investment, index of services and current account figures.

The focus then shifts to the US, with MBA mortgage applications at 1200 GMT, personal consumption expenditures, income and spending data at 1330 GMT and durable goods orders, also at 1330 GMT. The Reuters/Michigan Consumer Sentiment index is at 1500 GMT, the same time as new home sales, and Energy Information Administration's crude oil stocks are at 1530 GMT.

There are no scheduled releases in the UK corporate calendar.

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

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