Miners boost Britain's FTSE on bullishness over China's economy

Reuters - UK Focus

* FTSE 100 up 0.3 pct

* Miners extend China data induced gains

* Housebuilders buoyed by upbeat house price data

By Tricia Wright

LONDON, July 2 (Reuters) - British shares rose on Wednesday,taking their cue from Wall Street and Asia where stocks hitmulti-year highs, with miners among the leaders of a broad-basedrally, getting further support from upbeat data out of China.

Miners firmed 0.4 percent, extending theirgains from Tuesday when factory activity data from China, theworld's top metals consumer, reinforced signs of stabilisationin its economy.

"It's just a spillover from yesterday," Michael Hewson, CMCMarkets' senior analyst said.

"(Miners) have been some of the worst performers over thepast two or three years and they're just getting a little bitmore buying interest on the back of the fact that people thinkthat copper prices and commodity prices are going to edge up."

The FTSE 100 was 19.33 points, or 0.3 percent, at6,822.25 points by 1002 GMT, having kicked off the third quarterby rising 0.9 percent to notch its biggest one-day percentagegain in two months in the previous session.

In the United States, the Dow and the S&P 500 hit all-time highs on Tuesday, lifted by equally robust domesticmanufacturing data in addition to the strong China data. Asianstocks hit a three-year peak on Wednesday.

Risk-sensitive integrated oil and gas stocks,up 0.5 percent, and banks, 0.8 percent firmer, werealso on the top performers' list.

"I just think there's a general overriding confidence thatthis week's U.S. data will be supportive," CMC Markets' Hewsonsaid. The main focus on Wednesday in terms of U.S. data was onthe latest ADP employment report, ahead of the key jobs reportlater in the week.

HOUSE PRICES

Among the miners, Rio Tinto (Xetra: 855018 - news) and BHP Billiton (NYSE: BBL - news) advanced 0.5 percent and 0.8 percent respectively.

Miners account for 10 percent of the FTSE 100 index. Thesectoral FTSE 350 mining index ended the first half of the yearup by a meagre 0.5 percent, capped by a continued fall in theprice of metals such as iron ore and copper.

Copper accounted for 12 percent of Rio's and 22 percent ofBHP Billiton's revenues last year, with iron ore the largestrevenue source for both companies.

Some strength was seen from the housebuilders after figuresfrom mortgage lender Nationwide showing British house pricesrose at their fastest annual pace in more than nine years lastmonth.

Blue-chip Barratt Developments (LSE: BDEV.L - news) rose 0.7 percent,while among mid-caps, Bovis Homes (LSE: BVS.L - news) and Taylor Wimpey (LSE: TW.L - news) advanced 0.5 percent and 1 percent respectively.

The sector has been rattled in the past weeks on risingexpectations of a Bank of England rate hike before the end ofthe year, but analysts and traders view any such weakness as abuying opportunity.

While higher rates would raise the costs of borrowing tobuild, it would also signal the economy, and consequentlyfunding prospects, were looking brighter. In any case, somebelieve that interest rates will not rise for some time yet.

"The sector got clobbered a bit in the sell-off on interestrate worries. I think our view was that that was probablyoverdone," Peel Hunt equity strategist Ian Williams said.

"I just don't see where the inflationary pressure is enoughin the next six months to put rates up in October/November; Istill think it's a much more likely story for next year." (Editing by Alison Williams)

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