By Carla Mozee, MarketWatch FTSE 100 headed to weekly
advance
LONDON (MarketWatch) -- U.K. stocks rallied Friday, with mining
companies among the biggest advancers, after the central bank of
key metals buyer China cut interest rates.
The People's Bank of China unexpectedly and for the first time
in two years cut lending rates. The move came amid concerns that
the world's second-largest economy could miss its annual growth
target of around 7.5%. Recent economic data has indicated slowing
in the Chinese economy, with the key property sector suffering
further declines in prices.
Investors sent U.K. mining stocks sharply higher after the PBOC
move. Anglo American PLC jumped 5.5%, Rio Tinto PLC (RIO) leapt 5%,
BHP Billiton PLC (BHP) surged 5.1% and Antofagasta PLC tacked on
4.3%. The basic materials group pushed up 4.5%, the best-performing
sector on the FTSE 100 .
"The impact of China's move is a classic play of boosting global
equities, commodities and their currencies, reinforcing our
preferred play of shorting [the euro] and the pound versus the
Canadian dollar," said Ashraf Laidi, chief global strategist at
City Index, in a note Friday.
The FTSE 100 rose 1% to 6,748.07, extending its potential weekly
rise to 1.4%. The index has advanced for fourth consecutive
weeks.
Stocks had gained earlier in the session after European Central
Bank President Mario Draghi signaled the ECB is set to expand its
asset-purchase programs if inflation remains persistently low.
"We will continue to meet our responsibility -- we will do what
we must to raise inflation and inflation expectations as fast as
possible, as our price stability mandate requires of us," Draghi
told a banking conference in Frankfurt Friday.
Other advancers on Friday included Tullow Oil PLC , whose shares
rose 5.8%. The oil-exploration company's shares are up more than 6%
for the week, reflecting speculation that OPEC may agree to cut
output at its meeting next week, in an effort to stem the recent
slide in oil prices.
Shares of Rolls-Royce Holdings PLC climbed 1.2% as the company
said it won a $5 billion order from Delta Air Lines (DAL) to make
engines and provide support for 50 new aircraft. Rolls-Royce's
Trent XWB engines will power 25 Airbus A350s, and its Trent 7000
engines will power 25 Airbus A330neo aircraft.
On the FTSE 250 index, shares of Serco Group PLC dropped 7.4%
after the outsourcing firm's rating at Credit Suisse was cut to
underperform from neutral. After Serco last week unveiled
"significant onerous contract provisions and the risk of more to
come, we see huge uncertainty around the operational cash flows of
the business," wrote analyst Karl Green in a Friday note.
In other developments, the populist U.K. Independence Party, or
UKIP, won its second seat in the U.K. parliament on Thursday, a
blow to Prime Minister David Cameron's Conservative Party ahead of
the general election next year. UKIP is an advocate of the U.K.'s
exit from the European Union. The pound (GBPUSD) on Friday was
buying $1.5677, down from $1.5693 on Thursday.
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