- China optimism lifts commodity-linked stocks
- Direct Line falls as it faces $38 million redress bill
- Johnson Matthey lifts chemicals sector index
- FTSE 100 up 0.5%, FTSE 250 off 0.1%
- Both blue-chip, midcap indexes headed for weekly gains
Sept 1 (Reuters) – The blue-chip FTSE 100 index rose on Friday led by heavyweight oil and miner stocks, although a drop in insurer Direct Line’s shares pressured midcaps, ahead of a highly anticipated U.S. jobs reading.
Oil and gas stocks (.FTNMX601010) rose 1.9% and industrial metal miners (.FTNMX551020) added 0.8%, tracking optimism around China’s upbeat economic readings and efforts to shore up investor sentiment.
A private survey showed China’s factory activity surprisingly returned to expansion in August. The country’s central bank said it would cut the amount of foreign exchange that financial institutions must hold as reserves for the first time this year.
“The FTSE 100 has opened slightly higher…as broader optimism about what data from across the pond will say sets in,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, adding that China has taken a more aggressive approach to stimulate its economy.
Investors are now awaiting an August jobs report from the U.S., which will help gauge the Federal Reserve’s interest rate trajectory.
UK shares have underperformed broader European peers this year due to their heavy weightage of commodity-linked stocks that have lagged amid China’s lacklustre recovery and the Bank of England’s tough stance on inflation.
Renishaw (RSW.L) fell 3% to the bottom of the midcap index after Jefferies cut its price target on the engineering company.
The chemicals index (.FTNMX552010) jumped 3.4%.
Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sohini Goswami and Rashmi Aich
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