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FTSE rebounds as investors write off US rate hike

FTSE 100 makes up all of last week's lost ground, led by miners and oil stocks as investors bet against US interest rate rise.

FTSE rebounds as investors write off US rate hike

The FTSE 100 has rallied, making up all of last week's losses, as investors wrote off the chances of the US raising interest rates this week and anticipated more Japanese stimulus.

The UK blue-chip index jumped 96 points, or 1.4%, to 6,806, making up all the ground lost in last week's glum trading, helped by a rally in commodities stocks.

Miners and oil stocks were buoyed by a fall in the dollar as investors waged the US Federal Reserve would hold off raising interest rates this week. A weak dollar tends to help commodities as they are priced in the currency. The pound was up 0.4% against the dollar at $1.306.

Mining stocks jumped to the top of the index, including:

  • Anglo American (AAL) +4.3% at 849.2p;
  • BHP Billiton (BLT) +3.4% at £10.20;
  • Glencore (GLEN) +3.3% at 191.1p;
  • Fresnillo (FRES) +3.3% at £16.69;
  • Rio Tinto (RIO) +2.8% at £23.43;
  • Randgold Resources (RRS) +2.5% at £75.45.

That was despite a downbeat note issued by analysts at Haitong on the sector. Analysts Andrew Keen and Matt Fernley removed their 'buy' ratings on BHP Billiton, Glencore and Antofagasta, arguing that after a strong summer for their shares, miners would now be facing falling commodity prices.

Energy stocks were also in the ascendancy, as the price of Brent crude rose 1.3% to $46.36. Shell (RDSb) rose 2% to £19.26 while BP (BP) was up 2.2% at 429.5p.

Oil was given an added boost after Venezuelan president Nicolás Maduro said members of the Opec cartel of oil-producing nations were close to an agreement with non-Opec members over stabilising the market.

On the FTSE 250, shares in Mitie (MTO) tumbled, dropping 24% to 204.5p after the outsourced services provider issued a profit warning, blaming uncertain economic conditions caused in part by the 'Brexit' vote.

The news represents a blow to Citywire AAA-rated Hugh Yarrow and Ben Peters, whose top-performing Evenlode Income fund is one of the company's biggest investors.

Among 'small cap' stocks, the Lindsell Train (LTI) investment trust was a big faller, down 7.6% at 855p as the spectacular premium on the shares, which hit an all-time high of 76% last week, was trimmed. 

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