Despite deadlock in Wednesday’s talks between Greece and the rest of the eurozone, leading shares are edging higher again.
Investors are hoping that even though there was not even an agreement on issuing a statement, let alone any sign of deal, that the two sides will be able to reach a compromise before Greece’s money runs out.
Talk of a cease fire between Russia and Ukraine after prolonged peace talks is also helping sentiment.
And even though mining shares have been volatile as metal prices suffered on demand concerns, Rio Tinto has given a lift to the sector.
Its shares have jumped 90.5p to £30.62 - making it the biggest riser in the FTSE 100 - after it decided to hand back $2bn to shareholders on top of a bigger than expected dividend. The move came despite its worst half year profit in two years, with earnings down 30% at $4.19bn. But this was higher than analyst expectations of around $3.76bn, and it cut debt to $12.5bn, again better than forecast.
The company, which could yet face a renewed takeover attempt from Glencore, also said 125m tonnes of iron ore capacity came out of the market in 2014 and it expects another 80m tonnes in the current year. Numis said:
The low-cost/volume-push strategy appears to be working for Rio, marginal producers will continue to be pushed out of the arena, whilst Rio maintains decent margins, albeit not bull market margins. Rio see margins for low-cost producers returning to just above the average level seen before the China driven commodity boom. The buy-back is at the higher end of market expectations.
Overall the FTSE 100 is up 23.30 points at 6841.47, although energy groups are proving a drag on the market.
Royal Dutch Shell B shares are down 26p at 2218.5p after they went ex-dividend, while BP is 3.35p lower at 442.45p for the same reason.
But Burberry is 38p better at £18.59 after RBC began coverage with an outperform rating. It said:
Digital leadership, beauty expansion, and high US exposure should sustain Burberry’s top-line outperformance in 2015 and beyond. We believe Burberry deserves a higher PE valuation premium to luxury peers thanks to its stronger top- and bottom-line growth potential, superior return on invested capital and attractive cash return outlook.
Perhaps the shares have also received a boost from the sight of Greek finance minister Yanis Varoufakis wearing one of the company’s scarves.
