The Trading Floor

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LONDON MARKETS: Miners Pace Broad London Market Rally


12:00 EST Tuesday, January 02, 2007

Shares of mining companies on Tuesday led a strong London market advance on the first trading day of 2007, though volumes were muted with U.S. trading shut for mourning over the death of President Gerald Ford.

The U.K.FTSE 100 indexrose 1.5%, or 90.1 points, at 6,310.90, its highest level in six years.

The market advance was broad based, with only four FTSE 100 components losing ground.

The mid-cap FTSE 250also put on a strong advance, rising 1.3% at 11,317.40 to hit a new record high. Other European shares also rose.

Miners Lonmin, BHP Billiton (BHP) and Anglo American (AAUK) led the advance. Lonmin share rose 2.9%, BHP Billiton gained 2.9% and Anglo American rose 2.1%.

Gold prices added $4.40 to trade at $642.50 an ounce in electronic trading, helping mining companies to gain ground.

Retailers such as catalog retailer Home Retailand clothing chain Nextalso helped the index to advance, amid reports that December 27 - the first day of the Christmas sales in England -- was a record day for trading.

Home Retail shares rose 1.8% and Next, which updates investors on Thursday, rose 2.3%.

Retailers have been under some pressure in the run-up to Christmas as reports of weaker trading were exacerbated by companies such as HMVwarning in December that profits wouldn't be as high as previously hoped.

Still, some were concerned that the post-Christmas sales pick-up may come at the cost of margins.

"The shift in shopper numbers into the post Christmas period, when there has been some heavy discounting leads to concern for margins as the sector prepares to report Christmas trading in the weeks ahead," said Joe Spooner, an analyst at ABN Amro.

London M&A-related movers on Tuesday included Corus Group (CGA) , shares of which climbed 1.3% to 535.63 pence after a report that Tata Steel is close to boosting its 500-pence-a-share bid for the Anglo-Dutch steelmaker by 7% to 10%.

The online edition of India's Business Standard reported that this would mean a 535 to 550 pence a share bid for Corus. Corus already has a bid of 515 pence a share from Brazil's Cia. Siderurgica Nacional, or CSN.

Also, Royal Bank of Scotlandshares rose 2.2%, which along with Barclaysand HBOSled the banking sector higher.

The Financial Times reported that RBS has sold 47 Marriott Hotels to Israeli property group Delek Real Estate for 1.1 billion pounds ($2.15 billion).

Several major property companies were in focus after they said that they intend to convert to real estate investment trust status, effectively alleviating their U.K. tax burden.

Shares of British Landand Land Securitieseach rose 0.4%.

British Land said that, to convert to REIT status, it will pay a one-off conversion charge of more than 300 million pounds, while Land Securities said that it expects to pay a similar amount to convert but will determine the exact amount by carrying out a valuation of its qualifying property assets.

The charge will be paid in full in July, Land Securities added.

Outside the top index, shares in budget airline EasyJetrose 3.9% after a report that three major airline executives -- Sir Richard Branson of Virgin Group, Stelios Haji-Ioannou of the parent of EasyJet, and Datuk Tony Fernandes of AirAsia -- are in talks to form a global low-cost airline.

The online edition of the Star of Malaysia, citing industry sources, said the planned carrier initially would connect Kuala Lumpur with the U.K., the United Arab Emirates and India.

Gambling software company Playtechincreased 5.8% after it said that it has signed a new software license deal with operator PartyGaming.

Shares in PartyGaming, which on Friday bought two smaller online gambling operators, rose 11.8%.


(END) Dow Jones Newswires
01-02-07 1200ET
Copyright (c) 2007 Dow Jones & Company, Inc.