FTSE steadies as miners recover

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London - Britain's top equity index steadied on Tuesday from losses in the previous session that pushed it to a 3-week low, as a recovery in the copper price lifted mining stocks and propped up the market.

The blue-chip FTSE 100 index inched up 0.1 percent, or 5.41 points, to 6,694.86 points - recouping some Monday's 0.4 percent decline to its lowest level since mid-February.

The FTSE, which rose 14.4 percent in 2013 to post its best yearly gain since 2009, has been pegged back over the last month by the mining sector and recurring signs of a possible economic slowdown in China - the world's top metals consumer.

Global equities have also been under persistent pressure due to worries over tensions between Ukraine and Russia, after Russia's effective seizure of Ukraine's Crimea region in late February.

The FTSE 350 Mining Index, which fell 1.8 percent on Monday, rose 0.4 percent, as copper prices eased off 8-month lows.

Many fund managers with a longer-term view have said the fact that falls in stock markets have been relatively short-lived points to underlying optimism that the FTSE will gradually rise later in 2014 as Britain's economic recovery strengthens.

“There's still money coming in, with net inflows coming into Europe,” SVM Asset Management managing director Colin McLean said.

While investors have taken money out of emerging markets, European stocks have attracted a record $36 billion so far in 2014, according to data from EPFR Global, with U.S. investors in the vanguard.

SVM's McLean said the FTSE may hit a record 7,000 point level in the second quarter of 2014.

However, he said he prefers financial stocks to miners, due to nagging worries about a Chinese slowdown that have weighed on the sector, with the FTSE 350 Mining Index having made little progress this year after a 16.4 percent fall in 2013.

UBS analysts also remained cautious on the prospects for the mining sector, due to the risks of further metals price falls.

“Our commodity team expects iron ore and copper prices to fall materially in 2014-2015 on increased supply,” they wrote in a research note.

Reuters


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