By Sarah Turner
LONDON (Dow Jones)--British shares climbed sharply Monday, with
miners such as Rio Tinto and oil producers including BP helping
fuel the advance amid optimism over commodity demand trends in
China.
The FTSE 100 index advanced 2%, adding 88.25 points to
4,506.19.
Shares elsewhere in Europe gained ground, as did equities in
Asia overnight and in the U.S.
Wall Street's rally came on a day when General Motors Corp. (GM)
said that it will file for Chapter 11 bankruptcy protection.
"I think that markets are paying attention to the more
forward-looking newsflow, such as leading indicators, and paying
less attention to the backward-looking newsflow. GM has been in
trouble for decades and its restructuring is long overdue," noted
Mike Lenhoff, chief strategist at Brewin Dolphin.
In China, economic data showed that manufacturing expanded for a
third straight month in May, raising the prospect for higher
commodity demand.
In energy trading, crude-oil futures advanced 2%, topping $67 a
barrel.
As metal futures firmed, shares of Rio Tinto (RTP) traded up
6.5%, while rival BHP Billiton (BHP) added 5.3%. Doing better
still, shares of Anglo American rallied 7.5%.
Turning in nearly as strong a performance were oil
producers.
Among the oil majors, shares of BP (BP) climbed 2.7% and Royal
Dutch Shell (RDSA) added 1.7%. Shares of Cairn Energy stood out,
rallying 7.3%.
In the currency markets, sterling rose 1.7% to trade at $1.65,
contining its recent rally.
Data on the domestic economy showed that Britain's manufacturing
sector contracted at its slowest pace in 12 months during May,
according to the CIPS/Markit purchasing managers' index released
Monday. The PMI rose to 45.4 in May from an upwardly revised 43.1
in April.
Additionally, data from Hometrack showed that British house
prices were unchanged in May, ending 20 consecutive months of
declines.
Equities sensitive to trends in consumer spending include
catalog and home-improvement retailer Home Retail , up 4.8%, as
well as tour operator TUI Travel , up 3.9%, and restaurant operator
Whitbread , up 3.4%.
On the downside, shares of newspaper publisher Daily Mail &
General Trust declined 0.4%.
Citigroup downgraded the firm to sell from hold, saying the
weakening dollar and pressure in its business-to-business division
have mitigated the positive impact from cost savings.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274