Leading shares are edging up to new 14 month highs but mining shares are on the slide after disappointing Chinese data.
The country’s industrial production growth for July fell from 6.2% to 6%, while retail sales rose 10.2%, down from 10.6% in June.
So commodity companies, strongly linked to the Chinese economy, are under pressure, with Rio Tinto down 52p to £24.37, Antofagasta falling 6p to 526p and BHP Billiton 7p lower at 1048.5p.
Meanwhile precious metal miners are also heading lower as the recent dollar strength - due to growing talk that the strength of the US economy would allow a rate rise later this year - has taken the shine of gold and silver after their recent rises.
So Randgold Resources is down 170p at £84.75 and Fresnillo has fallen 40p to £19.32. Tony Cross, market analyst at Trustnet Direct, said:
There’s growing optimism that the hawks at the Federal Reserve may soon be circling once again, as the combination of improved US economic data and steady oil prices project a more acceptable landscape for a rate hike. Not only is this bolstering the greenback, but it’s also taking a toll on gold, leaving Fresnillo and Randgold Resources languishing towards the foot of the index.
But overall the FTSE 100 has added 14.12 points to 6928.83, helped by all three main US indices hitting record highs overnight. There was mixed economic data from the eurozone, with German growth better than expected but Italy disappointing. UK construction output was slightly higher than forecasts, down 0.9% month on month compared to expectations of a 1% decline.
With oil edging higher following Thursday’s comments from Saudi Arabia that a September OPEC meeting could act to support prices, BP is 1.05p better at 433.35p while Royal Dutch Shell A shares have added 11p to 1933.5p.
Among the mid-caps Restaurant Group has jumped 9% to 410.9p as the Frankie & Benny’s group ousted chief executive Danny Breithaupt and replaced him with former Paddy Power boss Andy McCue. The comp;any said a new leader was needed to implement its new strategy after April’s profit warning. Peel Hunt’s Ivor Jones said:
We believe that shareholders should be encouraged that the new chief executive:
- has experience of a consumer business;
- is not a restaurant sector insider; and,
- is free of ties to the current strategy.
However, this may imply a period of retrenchment while changes are made. We believe it is also encouraging that Mr McCue has led a business through a takeover, which may be in the medium-term future for Restaurant Group...
However, we believe a period of share price consolidation may follow the appointment of the new CEO. We maintain our hold recommendation and increase our target price to 380p [from 270p].
But biotechnology group Genus - best known for its bull semen - has dropped 10% to £17.37 after an unfavourable verdict in a US patent litigation case. N+1 Singer said:
The first jury verdicts in the long-running two-way litigation between Genus’ ABS (bovine) and US-based Sexing Technologies (‘ST’), announced this week, have in our view been disappointing for Genus. It has been announced this morning that the Wisconsin jury concluded that two of ST’s patents were infringed by ABS, and that Genus had breached confidentiality agreements. This follows the verdict announced yesterday that although ST had engaged in anti-competitive practises in relation to sexed semen, Genus had not been able to prove that it suffered a loss as a result. We believe that damages are likely to be awarded against Genus. We move our cautious hold recommendation to sell, noting the strong share price performance in the run-up to today’s verdict.
