Energy, miners cushion FTSE 100; higher yields cap gains

By Siddarth S and Shristi Achar A

(Reuters) – UK’s commodities-heavy FTSE 100 edged higher on Thursday, buoyed by rising oil and mining stocks, though gains were kept in check with yields on British government bonds moving higher.

The blue-chip index inched 0.1% higher, with industrial miners up 2.2%, as zinc and other base metal prices advanced. [MET/L]

British government bonds slumped on Thursday as part of a Europe-wide selloff. Thirty-year gilt yields, which move opposite to prices, surged. [GB/]

“We have seen a slight increase in expectations for higher rates and that’s most likely to be in sympathy with the yield move,” said Giles Coghlan, chief market analyst at HYCM.

Energy stocks rose 0.9% despite easing oil prices. [O/R]

“Oil supply will stay tight for some time, that will support oil price and so that’s great for UK stocks in a relative sense,” said Marija Veitmane, head of equity research at State Street Global Markets.

The pound rose, pressuring export-heavy sectors.

Homebuilders declined 3.4% as higher-for-longer rates partly weighed on investor sentiment, with Barratt Developments down 7.6% as the stock traded ex-dividend.

Meanwhile, the midcap FTSE 250 lost 0.7% to its lowest level in a month. Digital 9 Infrastructure led declines, and was down 39.5% as the investment firm withdrew its annual dividend target.

Among other movers, 888 Holdings tumbled 11.6% after the bookmaker forecast annual core profit below its prior expectations after flagging a 10% decline in third-quarter revenue.

Shares of Phoenix Group fell 7% after the life insurer posted a marginal rise in its half-yearly adjusted operating profit and traded ex-dividend.

Meanwhile, Britain set out plans to ease key banking and insurance rules in the latest attempt to boost its vital financial sector following the country’s departure from the European Union.

(Reporting by Siddarth S in Bengaluru; Editing by Sohini Goswami and Varun H K)