BHP Billiton leads UK miners higher, FTSE advances

Reuters - UK Focus

* FTSE 100 index up 0.4 percent by midday trading

* BHP Billiton (NYSE: BBL - news) adds most points to the blue-chip index

* Mining (LSE: MIR.L - news) index tops sectoral gainers list, hits 3-wk high

By Atul Prakash

LONDON, April 1 (Reuters) - Stronger BHP Billiton onthe news of a possible spin-off of unwanted businesses andexpectations of more stimulus from China to prop up its economyboosted London-listed miners and the broader stock market onTuesday.

The UK Mining index, the top sectoral gainer,rose more than 1 percent to a three-week high, helping theblue-chip FTSE 100 index to gain 0.5 percent to 6,628.13points by 1030 GMT.

Global diversified miner BHP Billiton, up 2.6 percent, added most points to the FTSE 100 as it considered a range ofoptions to simplify its portfolio of assets, including apossible spin-off of unwanted operations such as aluminium andnickel into a separate company.

"Aluminium and nickel have not been the most profitableparts of the business for BHP and a possible spin-off is a wellreceived news for investors and traders alike. It seems thecompany has positioned itself to make iron ore, copper, coal andpetrol its main business," Amrit Panesar, senior trader atAccendo Markets, said.

Other miners also gained, with Rio Tinto (Xetra: 855018 - news) rising 1.1percent and Vedanta Resources (Other OTC: VDNRF - news) advancing 0.8 percent onhopes of stimulus from China given persistent weakness in thecountry's manufacturing sector.

A string of weak economic data from China has lent supportto a view the government will try to boost demand in the world'slargest metals consumer. The Chinese premier said last weekChina could act to support infrastructure investment.

"For those investors looking to increase their exposure tomore cyclical parts of the market, we believe the mining sectoroffers a number of attractive stocks," Paul Kavanagh, directorof market research at Killik & Co, said.

"Although uncertainty over the outlook for economic growthin China, the main buyer of many commodities, provides anear-term headwind, we believe the decisions from the Chinesegovernment ... reduce the likelihood of a sudden economicdownturn," he added.

Among other sharp movers, Aberdeen Asset Management (Other OTC: ABDNF - news) rose 6.3 percent to be the top percentage gainer on the FTSE 100as investors welcomed cost cuts at the asset manager and aslowdown in the pace of outflows, confounding hefty bearish betson the stock.

Markit data showed the stock was heavily "shorted" byspeculative investors in recent months in anticipation of poorresults.

On the downside, Scottish engineer Weir Group (Frankfurt: 42W.F - news) , down2.4 percent, was the top loser after saying it had made an"indicative all share merger proposal" to Finnish rival Metso (Dusseldorf: VLM.DU - news).

Charts signalled more gains, with analysts saying the FTSE100 could move up towards the top end of a range, between 6,400to 6,800 points, it has been trapped in since late October.

"In the short-term, a potential break above 6,655 - whichmarks the convergence of the 50-day moving average with ashort-term bearish trend line - could see the index squeezehigher towards ... 6,755 or 6,885," Fawad Razaqzada, technicalanalyst at FOREX.com, said.

(Additional reporting by Tricia Wright; Editing by AlisonWilliams)

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