By Sarah Turner
LONDON (Dow Jones)--Miners led a fresh rally in U.K. stocks on
Wednesday, with Rio Tinto advancing after an upbeat production
report.
But the gains were broad-based after healthy earnings from the
likes of Intel, J.P. Morgan Chase and BASF.
Overall, the U.K. FTSE 100 index rose 2%, or nearly 102 points,
to 5,256.10. Across the London market, gainers outnumbered
decliners by a 2-to-1 margin.
Anglo-Australian mining giant Rio Tinto (RTP) rose 5.3% after
the firm said its iron-ore output in the September-ended quarter
rose 12% from a year earlier, a record for the period, as mines
worked at full steam to meet strong global demand.
Rio Tinto said output at its iron-ore mines in the Pilbara
region of Western Australia rose 18% during the quarter, compared
with a year ago.
Of other metals, copper output was up 24% in the quarter, output
of hard-coking coal declined 5% and thermal-coal output rose 12%.
Bauxite output fell 16% and aluminum declined 4%.
Analyst reaction to the figures was broadly positive. Barclays
Wealth analysts called the statement "strong" and Evolution
Securities analysts said that Rio Tinto's third-quarter production
numbers reflect the strength of iron-ore demand in China.
The Evolution analysts added "while cautiously positive, the
outturn will depend on the trajectory of interest rates and other
stimuli."
Other miners advancing included Kazakhmys , up 9.4%, and Xstrata
, up 7.7%.
The sector gains came as most metals futures rose as the dollar
weakened against most major currencies on Wednesday, including
sterling.
On the U.K. economic front Wednesday, data showed that the
number of British workers claiming jobless benefits in September
posted the smallest rise since May 2008. That's a sign that the
deterioration of the labor market is beginning to slow, economists
said.
The rise, however, still brought the total number of persons
claiming benefits to 1.63 million, a 12-year high, equal to 5% of
the workforce.
Consumers have been cautious amid higher unemployment.
Alcoholic-drinks maker Diageo (DEO) commented on consumer spending
trends on Wednesday saying "consumer trends across our markets
remain broadly unchanged since the year-end. Therefore net sales in
the first quarter of the new financial year have been weak."
Diageo shares fell 2.1% on Wednesday after it said sales in the
first quarter ended Sept. 30 fell 6% on an organic basis, a bigger
drop than a 3% to 4% decline forecast by analysts.
The group stuck to its guidance for low-single-digit organic
operating-profit growth in fiscal 2010.
Outside the top index, shares of Punch Taverns fell 16.6% after
the pub operator reported its net loss for the year ended Aug. 22
widened to 176.4 million pounds ($280.4 million) from 64.7 million
pounds. The latest figure reflected one-off charges including a 663
million pound impairment charge on its pub estate.
Revenue for the year fell 7.7% to 1.44 billion pounds and pretax
profit before one-off charges dropped 39% to 160.4 million pounds,
in line with expectations.
"The rumored hit to asset values is confirmed with a 663 million
pound impairment charge to pub assets, in line with estimates
recently quoted in the press. This brings net asset value per share
to 260 pence as reported by the company today," said analysts at
Seymour Pierce.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274