FTSE 100 movers: Banks and utilities on the yield seesaw
Miners led London's blue chips marching higher on Tuesday as news of new stimulus measures to boost growth from Beijing raised hopes of increased demand for industrial metals and minerals.
The FTSE 100 rose to a month's high just above 7,740 on Tuesday afternoon, with commodities giants Glencore and BHP Billiton both adding more than 6%, while Anglo American, Rio Tinto and Evraz all climbing more than 5%.
A day after providing a record injection of funding for banks, China pledged to inject life back into the slowing economy and counteract jitters created by heated rhetoric on trade relations with the US.
China's State Council said it would adopt "a combination of fiscal and financial measures in an effort to boost domestic demand and bolster support for the real economy", with the "more proactive" fiscal policy, including a focus on introducing deeper tax cuts.
Pressure on China and its currency had forced Beijing to intervene, said analyst Mike van Dulken at Accendo Markets.
Copper prices, which have tracked the yuan lower, were also boosting the mining sector, said market analyst Connor Campbell at SpreadEx, saying the rally was on reports of stalled negotiations between workers and management at the giant Escondida mine in Chile would cause a disruption to supply. Escondida is managed by BHP Billiton and Antofagasta owns a 30% stake.
HSBC and Standard Chartered, banks with big businesses in China, rose 1.4% and 2.1% respectively.
Banks were also boosted by surging US and Japanese government bond yields, which are being supported by expectations of monetary policy tightening. Royal Bank of Scotland led the sector, with Barclays and Lloyds also higher. Also helping sentiment was a strong set of second-quarter figures from Swiss rival UBS.
But while a steeper interest rate curve lifts all banks, it really weighs on utilities, which are sensitive to rates due to their high gearing.
So at the other end of the seesaw, a cabal of electricity and water companies bumped lower, with SSE down 2.2%, United Utilities falling 1.8%, National Grid 1.7%, British Gas owner Centrica losing 1.5% and Severn Trent off 0.8%.
Market Movers
FTSE 100 (UKX) 7,736.72 1.06%
FTSE 250 (MCX) 20,875.66 0.51%
techMARK (TASX) 3,591.40 0.33%
FTSE 100 - Risers
Glencore (GLEN) 330.00p 6.45%
BHP Billiton (BLT) 1,707.00p 6.01%
Anglo American (AAL) 1,698.34p 5.84%
Rio Tinto (RIO) 4,294.50p 5.68%
Evraz (EVR) 550.20p 5.20%
Antofagasta (ANTO) 981.20p 4.16%
Royal Bank of Scotland Group (RBS) 251.20p 3.80%
Standard Chartered (STAN) 699.50p 3.48%
Micro Focus International (MCRO) 1,283.50p 2.93%
Mondi (MNDI) 2,066.00p 2.84%
FTSE 100 - Fallers
SSE (SSE) 1,331.50p -2.28%
United Utilities Group (UU.) 708.20p -1.78%
National Grid (NG.) 823.10p -1.71%
Centrica (CNA) 150.70p -1.54%
Just Eat (JE.) 865.60p -1.46%
Coca-Cola HBC AG (CDI) (CCH) 2,736.00p -0.83%
Relx plc (REL) 1,692.50p -0.82%
Severn Trent (SVT) 1,886.00p -0.79%
Associated British Foods (ABF) 2,429.00p -0.78%
Kingfisher (KGF) 311.30p -0.73%