FTSE recovers from lows as Chinese data boosts mining shares
* Blue-chip FTSE 100 index closes 0.4 percent higher
* Mining companies rally following Chinese trade data
* Charts signal further weakness in short term
By Atul Prakash
LONDON, Oct 13 (Reuters) - Britain's top share index rose
from a 15-month low on Monday, propelled by a rally in mining
stocks, after China reported better-than-expected data on trade.
The UK mining index surged 3.4 percent, the
biggest one-day percentage jump in more than a year, after China
said its exports rose 15 percent in September and copper imports
rose nearly as much, encouraging investors that demand was
holding up in the world's top metals consumer.
Anglo American (LSE: AAL.L - news) , Randgold Resources, Rio
Tinto, Fresnillo (Other OTC: FNLPF - news) and BHP Billiton (NYSE: BBL - news) , up
2.9 to 4.7 percent, were among the top gainers on the blue-chip
FTSE 100 index.
Anglo American was also helped by more reports of potential
asset sales in Chile, and Rio Tinto (Xetra: 855018 - news) got some help from a report
saying its stock may rise as much as 20 percent in the next
year.
However, fund managers and analysts advised caution.
Investors were taking advantage of an 18 percent drop in the UK
mining index in the past two months on global growth concerns
and a firmer dollar, they said.
"The reason for the mining shares being up today is better
trade data from China. We are seeing some cheap buying because
they have been badly hit over the last few weeks," John B Smith,
senior fund manager at Brown Shipley, said.
"But the message still is to stay underweight. We still
haven't had enough confirmation that the global growth prospects
are attractive and that China is completely out of the woods.
And we are not seeing any sustained recovery in commodity and
metals prices."
Weak European data and the winding down of the Fed's
monetary stimulus have hit global equities over the past week.
The IMF's member countries said on Saturday bold action was
needed to bolster the global recovery.
Underscoring the fragile nature of the European economy, S&P
on Friday lowered its ratings outlook on France.
Britain's benchmark blue-chip FTSE 100 index closed
0.4 percent higher at 6,366.24 points after falling earlier in
the session as far as 6,294.64, its lowest level in 15 months.
Charts suggested the index, which has fallen about 8 percent
in three weeks, might drop further. The FTSE 100's next support
level was seen at around 6,023 points, its June 2013 low, after
it broke out of an ascending trend that began last year.
Concerns about global growth hit chipmakers, with ARM
Holdings extending its previous session's decline, down
2.4 percent following a sales warning by Microchip Technology (NasdaqGS: MCHP - news)
last week.
(Additional reporting by Francesco Canepa, editing by John
Stonestreet and Larry King)