London Markets: FTSE 100 moves solidly higher as oil and mining stocks rise

U.K. blue-chip stocks on Thursday were pulled higher, with advances for mining and oil shares setting the market on course for a second straight rise.

The sector gains came as prices of oil and metals gained, partly due to a fall in the U.S. dollar Wednesday after mixed economic data.

How markets are performing

The FTSE 100 UKX, +0.52% added 0.5% to 7,252.64, led by the basic materials and oil and gas groups. Together, those groups make up nearly 25% of the benchmark’s weighting, according to FactSet data. The utility and consumer goods sectors were trading lower. On Wednesday, the London index rose 0.6% after a volatile session.

The pound GBPUSD, +0.3857%  bought $1.4052, more than $1.4001 late Wednesday in New York.

The yield on the 10-year gilt TMBMKGB-10Y, +1.56%  rose 3 basis points to 1.65%, according to Tradeweb.

What’s moving markets

Weakness in the U.S. dollar has lifted most dollar-denominated commodities, such as copper HGH8, +0.12%  and oil CLJ8, +0.59%  . Crude oil prices were building on Wednesday’s rally, which was also bolstered by data showing a disappointing rise in weekly U.S. crude inventories.

Supported by those rises for metals and oil, shares of mining and energy companies gained ground in London, helping drive the index higher.

U.K. stocks were latching onto gains even after the U.K. pound rose above $1.40, as the dollar stumbled. Strength in sterling can eat into earnings made overseas by multinational companies on the FTSE 100.

Stronger-than-expected U.S. inflation data and rising Treasury yields initially lifted the greenback on Wednesday, but that was accompanied by data showing an unexpected drop in U.S. retail sales. Those mixed signals may have helped sink the dollar, analysts said.

Check out: Here’s why the U.S. dollar isn’t getting much love

What strategists are saying

“Given that these gains are coming after the hawkish, and higher-than-forecast, inflation figures out of the U.K. and the U.S., it appears that investors have become slightly more accepting of any impending increase in interest rates. Or, at the very least, they saw little in Tuesday’s and Wednesday’s data to speed up the schedules laid out by the Federal Reserve and Bank of England in the last few weeks,” said Spreadex financial analyst Connor Campbell in a note.

“It appears that the FX market has simply lost confidence in the dollar. Widening interest rate differentials and expectation of further U.S. tightening aren’t supporting the currency like they used to,” said Marshall Gittler, chief strategist at ACLS Global, in a note.

Stocks in focus

Standard Life Aberdeen PLC shares SLA, -4.75%   slumped 4.9% after it said Lloyds Banking Group PLC LLOY, +1.23%  and Scottish Widows have given notice to end the £109 billion ($151.7 billion) investment-management arrangement that was reached in 2014. Lloyds shares climbed 1.3%.

Shares of oil producers BP PLC BP., +0.25% BP, +1.71%  climbed 2.1% and Royal Dutch Shell PLC RDSB, -0.37% RDS.B, +1.94%  picked up 1.2%.

Among miners, Anglo American PLC AAL, +3.01%  fell 3.6%, BHP Billiton PLC BLT, +2.67% BHP, +3.23% BHP, +4.56%  claimed a 2.7% rise, and Antofagasta PLC  ANTO, +2.86%  bulked up 2.5%.

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