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Miners keep Britain's FTSE on track for second monthly gain
August 31, 2017 / 9:33 AM / a month ago

Miners keep Britain's FTSE on track for second monthly gain

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* FTSE 100 up 0.6 pct

* Blue chips set for second monthly gain

* Miners, financials prop up index

* Downgrades hit G4S and Provident Financial

By Kit Rees

LONDON, Aug 31 (Reuters) - Britain’s top share index rose on Thursday, extending gains from the previous session as support from commodities-related stocks and financials kept the blue-chip index on course for a second consecutive monthly gain.

The FTSE 100 was up 0.6 percent at 7,410.27 points by 0910 GMT, while mid-caps rose 0.5 percent.

Mining stocks were the standout performers, with Antofagasta , Anglo American, Glencore and Rio Tinto among the top gainers as the price of copper strengthened.

Mining companies have been among the best-performers in August, with the sector set to end the month up about 8 percent.

Precious metals miner Randgold Resources has led the way, climbing more than 12 percent this month as geopolitical jitters resulting from tensions between North Korea and the United States have propped up demand for safe-haven assets.

Peer Fresnillo has gained nearly 7 percent this month.

“The strength in industrial metals has been something of a saviour for the FTSE,” said Jasper Lawler, head of research at London Capital Group, adding that recent weakness in sterling has also been a contributing factor.

“No matter what gets thrown at the market, there still seems to be a fair bit of resilience, so even with all the concern around North Korea and more domestically about the Brexit negotiations, there’s an underlying confidence that we’re still in a bull market.”

Financials also extended their recovery from the week’s earlier flight from riskier assets after North Korea launched a missile over Japan on Tuesday.

While individual moves were generally rather muted, downgrades from brokers weighed on shares in security firm G4S , which fell 2.7 percent after UBS cut its rating on the stock to “neutral” from “buy”. However, UBS analysts added that they had turned positive on the broader UK outsourcing sector because of growing earnings momentum.

Shares in troubled subprime lender Provident Financial Group (PFG) also dropped more than 2 percent after downgrades from brokers Jefferies and Canaccord Genuity.

Provident’s shares have tanked 57 percent this month after a profit warning prompted by problems at its door-to-door lending business.

“PFG now faces a layer of uncertainty brought about by the disastrous implementation of a new operating model in home collect credit. This makes both forecasting and valuation more than usually difficult,” Jefferies analysts said in a note.

“In the short term its dividend-paying capacity is impaired and over the longer term we now use a lower payout ratio.”

Jefferies cut its rating on Provident to “hold” from “buy”.

Reporting by Kit Rees; Editing by David Goodman

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