Miners keep FTSE on track for weekly gainComment on this story
London - Basic-materials shares helped to keep Britain's top equity index on track for a second straight weekly gain on Friday, offsetting a retailing sector pulled lower by WM Morrison.
The index was up 1.4 percent for the week, rallying from six-week lows at the beginning of February.
It climbed above its 50-day moving average on Thursday, a technical signal which suggested underlying support from buyers.
“We have managed to hold the December lows and, given the buying levels on the weak market, we remain encouraged,” said Atif Latif, the director of trading at Guardian Stockbrokers.
“The FTSE still remains in an uptrend and we continue to see the market pushing higher.”
Basic materials added 6.2 points to the index and miners gained 0.9 percent, the top sectoral riser.
Mining is up 6.2 percent this year, 4.2 percent of which has come in the last week.
Global strategists at Citi recommended investing in basic-materials shares with an emerging-market exposure, highlighting lower capital expenditure and improved cash flow generation.
Decent results from Anglo American helped to encourage the broader sector.
The company beat consensus with its 2013 operating profit and reported a profit at its platinum unit.
“The results from Anglo platinum are pretty good and ... they're getting costs down,” said Matthew Hasson, the director of mining equity sales at Numis Securities.
However, the stock was up just 0.1 percent, despite its bullish sector. Issues specific to Anglo, such as rising net debt and negative free cash flow this year, could weigh on the shares, analysts at Jefferies said.
They expect profit-taking on a stock that is up over 16 percent already so far this year.
Overall, the FTSE 100 was little changed in percentage terms, edging up 2.90 points to 6,662.32 points by 13:43 SA time.
Weighing on the market was WM Morrison, down 2.2 percent after BNP Paribas cut its target price on the stock, citing concerns that larger supermarkets are losing market share to cheaper firms.
“Morrison's Christmas trading was a shock but to deliver -7 percent like-for-like sales in January against a -6 percent comp ... suggests sales are unravelling,” analysts at Exane BNP Paribas write in a note.
“The consumer's embrace of the discounters has hurt all of the mainstream grocers, but Morrison's geographic and demographic positioning has left it exposed and its value credentials have been most tarnished.”
Fellow blue-chip grocer J Sainsbury was down 1.7 percent. - Reuters