By Benjamin Chiou
Date: Wednesday 25 Apr 2012
The mining sector, a category often sensitive to the outlook for the Chinese economy, was making gains on Wednesday afternoon after the country’s Prime Minister sought to ease concerns about slowing growth.
Wen Jiabao said yesterday that the world’s second-largest economy will continue to growth at a “robust” pace this year, despite the government reducing its gross domestic product (GDP) growth forecast from 8% to 7.5% last month.
“China has confidence that it will sustain steady and robust economic growth,” he said at a meeting in Stockholm. “China will remain committed to reform and opening up.”
The comments sparked a rise for mining stocks today, with Vedanta Resources, Glencore International, Xstrata, Kazakhmys, Anglo American and Fresnillo among the best performers on the FTSE 100 on hopes that demand for commodities from China will be as “robust” as economic growth.
Diversified mining group Rio Tinto was also in demand on the news that it has received regulatory approvals for the development and operation of the Simandou iron ore project in Guinea.
In contrast, food and drugs retailers were left off investors’ shopping lists today on fears about the environment for the British consumer after the Office for National Statistics revealed that the UK economy fell back into recession at the start of 2012.
GDP fell by 0.2% in the first quarter of this year compared with the 0.3% contraction in the preceding quarter. Economists had expected a slight expansion of 0.1%.
High Street chocolatier Thorntons was the worst performer in the food and drug retailing sector, falling by 6%. Supermarkets Morrison and Sainsbury were also out favour.
Meanwhile, hot snacks and bakery chain Greggs and supermarket group Tesco were heavy fallers too but this was partly due to both stocks going ex-dividend, meaning that investors (from today) will not have the right to the companies’ latest dividends.
Top performing sectors so far today
Mining 20,577.32 +2.00%
Industrial Metals & Mining 3,874.59 +1.98%
Personal Goods 22,123.19 +1.96%
Forestry & Paper 6,134.29 +1.88%
Industrial Engineering 7,859.64 +1.80%
Bottom performing sectors so far today
Food & Drug Retailers 3,973.03 -1.77%
Pharmaceuticals & Biotechnology 9,660.79 -1.75%
Gas, Water & Multiutilities 5,017.64 -1.36%
Electricity 8,398.75 -0.66%
Tobacco 36,145.18 -0.61%
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