By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Shares of Rio Tinto PLC retreated after
the departure of its top executive and a $14 billion charge taken
by the mining company, but they had trimmed their decline by the
close of London trading Thursday as the broader market found
support on the back of upbeat U.S. economic data.
The U.K.'s FTSE 100 index rose 0.5% to end at 6,132.36. The
benchmark had closed at 6,103.98, off 0.2%, in Wednesday
trading.
Mike McCudden, head of derivatives at stockbroker Interactive
Investor, said the biggest test for markets this week remains
Chinese data due Friday. Mining stocks, a heavyweight sector in the
London market, are especially sensitive to economic signals out of
China.
"We are however continuing to see profit-taking from investors
thanks to the recent rally but as yesterday's performance showed,
with every wave of selling there emerges a new tranche of investors
ready to buy in on the dips," he wrote in emailed comments.
Economic data from the U.S. inspired some afternoon gains for
London stocks, including housing starts for December that surged to
a four-year high, blowing past economists' forecasts. On Wall
Street, shares scored broad gains. .
Shares of Rio Tinto (RIO) fell 0.5%, partially recovering after
an earlier fall of more than 2%. The catalyst was Tom Albanese's
departure as chief executive on news that the Anglo-Australian
mining group will book a $14 billion impairment charge.
Citigroup, however, lifted its rating on Rio Tinto to buy from
neutral and advised investors not to overreact to the day's
news.
"One of our structural bearish criticisms of the sector has been
poor capital allocation, and lack of shareholder focus. We believe
today's announcement could significantly realign Rio Tinto with
shareholder interests through reduced M&A and reduced capex
spend," the analysts said in a note.
Also on the downside, shares of Aberdeen Asset Management PLC
fell 1.7%. Assets under management at the fiscal-year end rose to
187.2 billion pounds from 169.9 billion pounds, the company
said.
On the upside, shares of Associated British Foods PLC jumped
3.2%. The diversified food, ingredients and retail company reported
revenue for the first 16 weeks was 10% ahead of last year, adding
that it now expects to make more progress in full-year adjusted
operating profit.
Banks also moved higher in London, with shares HSBC Holdings PLC
(HBC) moving up 1.1% and Barclays PLC (BCS) adding 0.9%.
Deutsche Bank released a positive note on the sector Thursday,
with analysts turning more cautiously optimistic on the trend for
provisions for payment protection insurance. Many U.K. banks have
had to take provisions for the "misselling "of such insurance.
"Though we would not be surprised to see 'top-ups' to provision
levels in 4Q12 results, we think banks already hold significant
capacity for future repayments at current claim rates, and that
recent redress and search volumes suggest claims may be slowing,"
the analysts wrote in a note.
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