A rise in mining shares has outweighed another slump in housebuilders, helping lift the UK market higher.
Glencore, which has been volatile in recent months to say the least, has climbed 7p to 126.45p after the group said it was on track to cut its debt from $30bn to $20bn by the end of 2016. It plans to make further cuts to its copper output amid falling metal prices, reducing production by 455,000 tonnes by the end of 2017.
It will save $2.4bn from suspending its final dividend this year and interim payout in 2016, and has agreed to sell future silver output from a mine in Peru for $900m in cash to Silver Wheaton. It is also negotiating to sell a minority stake in its agricultural business as well as the Lomas Bayas and Cobar copper miners.
It added that its trading division had performed better in the third quarter, allowing it to keep its full year earnings target of $2.5bn to $2.6bn for the division. Canaccord Genuity said:
We will need to review today’s releases in detail, but we expect that the disposal will please the market, and on the presumption that the reduced production across a number of commodities is a function of adjusting to costs (rather than production problems) this will also be welcomed. Overall today’s releases should be treated positively by the market.
Elsewhere in the sector Anglo American has added 30.7p to 592.6p and BHP Billition 27.5p to £10.86 after comments from China. Tony Cross at Trustnet Direct said:
Miners are very much leading the charge for London in the day’s early trading, with Glencore at the top of the FTSE-100 off the back of this morning’s update, whilst the sector as a whole found cheer off the back of what are being seen as supportive comments from China. The president has made ‘economy-friendly’ comments, along with proposals for financial market reform, which is again certainly helping add to the general feel-good factor.
Marks and Spencer is up 16.5p at 537p in a positive reaction to its results.
But housebuilders continued their falls. On Tuesday a negative note from Liberum did the damage. And despite positive trading comments from Persimmon, which said it expected to continue generating strong growth, the sector is under pressure once more. Persimmon is down 52p at £18.69 while Taylor Wimpey is 5.6p lower at 182.1p and Barratt Development has lost 16.5p to 570p.
On Persimmon Liberum issued a sell note, saying:
The sell recommendation rests on a view that gross margins are likely to come off in future as the FPC plays a part in moderating house price inflation, on which Persimmon says “will support a more stable and sustainable outlook for the housing market”.
Overall the FTSE 100 is currently up 53.27 points at 6436.88, helped by a rebound in the UK services sector.
