FTSE 100 Friday close: Gold price rise drives mining shares higher

14th February 2014

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Mining stocks helped the FTSE 100 edge slightly higher over the week as the price of gold gained some traction writes Philip Scott.

Boosting bullion’s safe haven appeal, among other factors, was the news that the cold weather hit US retail sales in January while the amount of people claiming unemployment benefits also rose in early February.

The price-tag on the precious metal jumped from $1,267 per ounce on 7 February to just over $1,318 by London market closing time on Friday. Gold is now up by more than 9% since the start of the year.

The FTSE 100 closed on Friday at 6,663.62, a mere 4.2 points up on the day but 1.4% better over the trading week.

Mexican precious metal miner Fresnillo enjoyed the best gains on the leader-board over the week. The firm’s shares rocketed 23% to 971.5p while Randgold Resources firmed 8% to 4,774p.

Petrofac witnessed its share jump by 10% to 1,317p after it, in a joint venture won an oil refinery contract in Kuwait. Also on the up were insurer Legal & General, closing 8% better at 238.9p and Mondi, up 7% at 1,028p.

Elsewhere among the blue-chips, the performance of sugar and sweetener group Tate & Lyle is likely to have left a sour taste with shareholders after the stock plummeted by 15% to 657.5p, making it the week’s steepest faller in the top 100.

The group said it anticipated that annual profits would echo last year’s £329m, which fell short of City expectations. The firm cited poor sales in developed markets as partly to blame.

On Thursday Rolls-Royce, off 13% at 1,025p, spooked the market after it announced that U.S. and European spending cuts would hit profit growth this year. The aerospace manufacturer warned that it expects profits at its defence-aerospace division to drop by 15% to 20%.

Tullow Oil was also off, falling 8% to 768.5p, while troubled insurer RSA, which recently appointed former Royal Bank of Scotland boss Stephan Hester as its new chief, also slumped 8% over the week to 95.85p.

Barclays shed 7% over the week to 253p following its full year results where adjusted pre-tax profits fell by around a third from £7bn to £5.2bn. It also revealed it had plans to shed up to 12,000 jobs this year, including some 7,000 in Britain and that despite the drop in profits and staff cuts, it had upped its bonus pool, by 10% to almost £2.4bn in 2013.

The still 33% state owned Lloyds Banking Group lost 2% to finish at 80.45p as its chief executive Antonio Horta-Osorio defended his £1.7m bonus. The firm announced a pre-tax profit, of £415m, for the first time since its bailout.

Elsewhere in the banking sector, Royal Bank of Scotland was cautioned that it was potentially facing a downgrade by the credit rating agency Moody’s as a result of January’s profits warning. But despite the news the 81% taxpayer backed bank rose almost 2% to 342.6p.

Next week sees updates and results come from, Intercontinental Hotels Group, BHP Billiton and British Gas owner Centrica.

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