London - British shares rose on Wednesday, taking their cue from overnight gains on Wall Street and in Asia, with mining stocks drawing continued support from recent upbeat data out of China, the world's top metals consumer.
Miners rose 0.9 percent, the best performing sector, extending gains from Tuesday when factory activity data from China reinforced signs of stabilisation in its economy.
“It's just a spillover from yesterday,” Michael Hewson, CMC Markets' senior analyst said.
“(Miners) have been some of the worst performers over the past two or three years and they're just getting a little bit more buying interest on the back of the fact that people think that copper prices and commodity prices are going to edge up.”
The FTSE 100 was up 21.12 points, or 0.3 percent, at 6,824.04 points by 10:15 SA time, having kicked off the third quarter with aplomb - rising 0.9 percent to notch its biggest one-day percentage gain in two months in the previous session.
In the United States, the Dow and the S&P 500 hit all-time highs on Tuesday, lifted by equally robust domestic manufacturing data in addition to the strong China data. Asian stocks hit a three-year peak on Wednesday.
In London, Rio Tinto and BHP Billiton both advanced 1 percent.
Miners account for 10 percent of the FTSE 100 index. The sectoral FTSE 350 mining index ended the first half of the year up by a meagre 0.5 percent, capped by a continued fall in the price of metals such as iron ore and copper.
Copper accounted for 12 percent of Rio's and 22 percent of BHP Billiton's revenues last year, with iron ore the largest revenue source for both companies.
Some strength was seen from the housebuilders after figures from mortgage lender Nationwide showing British house prices rose at their fastest annual pace in more than nine years last month.
Blue-chip Barratt Developments rose 1.1 percent, while among mid-caps, Bovis Homes and Taylor Wimpey advanced 1.7 percent and 0.5 percent respectively.
The sector has been rattled in the past weeks on rising expectations for a UK rate hike before the end of the year, but analysts and traders view any such weakness as a buying opportunity.
While higher rates would raise the costs of borrowing to build, it would also signal the economy, and consequently funding prospects, were looking brighter. In any case, some believe that interest rates will not rise for some time yet.
“The sector got clobbered a bit in the sell-off on interest rate worries. I think our view was that that was probably overdone,” Peel Hunt equity strategist Ian Williams said.
“I just don't see where the inflationary pressure is enough in the next six months to put rates up in October/November; I still think it's a much more likely story for next year.” - Reuters