Mining up on belief Japan's building drive will boost raw materials prices

FTSE: 5,900.76 (+19.89) Mid-250: 11,629.31 (+23.79) Small Cap: 3,238.04 (+22.05)

ANY FAINT jitters over the raft of recent downgrades for Portugal were not in evidence in the London equity market yesterday as investors backed miners on hopes the massive rebuilding programme about to be undertaken in Japan would create new demand and drive raw materials costs higher.

The FTSE 100 advanced 19.89, or 0.3 per cent, to 5,900.76 at the close in London.

“Traders are turning their attention to the implications surrounding the rebuilding of Japan and this will without doubt see demand for raw materials increase as a result, while the fact gold prices are toying with fresh record highs is also likely to keep the mining sector well supported,” said Harley Salt at IG Markets.

Among the miners, Lonmin was up 1.1 per cent to £16.88, while Kazakhmys added 1.1 per cent to £14.47.

African Barrick Gold gained 1.9 per cent to 539p thanks to new record highs in the price of bullion. Meanwhile, Citigroup upgraded the stock to “buy” from “hold”.

Rival Randgold Resources was up 0.3 per cent to £47.36. Platinum producer Johnson Matthey rose 2 per cent to £18.81.

BP shares recovered from early heavy losses after its proposed share swap and Arctic oil exploration deal with Russia’s state-run group Rosneft was blocked by an arbitration tribunal following complaints from investors in its existing Russian joint venture TNK-BP. The British oil group edged 0.3 per cent lower to 479.52p.

Reckitt Benckiser was the biggest gainer on the FTSE 100 after Bank of America-Merrill Lynch raised its recommendation on the stock to “buy” from “neutral”.

Its shares gained 3.1 per cent to £31.60.

Songbird Estates, the owner of the Canary Wharf development in London, rose 2.1 per cent to 144 after reporting full-year profit more than doubled in 2010 following the sale of the building formerly occupied by Lehman Brothers to JPMorgan.

Drax, owner of the UK’s largest power station, climbed 4.2 per cent to 387.4p, rebounding from four days of losses.

Britain’s new tax on carbon-dioxide may fail to reduce power generation from coal, according to Evolution Securities. – (Copyright The Financial Times Limited 2011/Bloomberg)