LONDON MARKETS: FTSE 100 Edges Up As Miners, Oil Companies Find A Higher Toehold

By Carla Mozee, MarketWatch

DIY retailer Kingfisher tops index after earnings

U.K. stocks turned higher Tuesday, as commodity shares managed to nudge upwards even as oil prices dropped and worries about Federal Reserve interest-rate rises persisted.

The FTSE 100 was up 0.3% at 6,156.98 after opening in the red. The London benchmark shed 0.3% on Monday (http://www.marketwatch.com/story/ftse-100-edges-higher-even-as-miners-struggle-2016-05-23), as energy shares were dragged down alongside falling oil prices.

Crude prices were again falling early Tuesday, but shares of energy majors were able to advance. BP PLC (BP.LN) (BP.LN) was up 0.4%, and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) was higher by 0.2%.

Mining shares lost ground earlier Tuesday, as investors worried about the prospect of a U.S. interest-rate increase in coming months, which could result in higher borrowing costs for emerging markets. But some shares flipped higher, with Anglo American PLC (AAL.LN) up 0.6% and Antofagasta PLC (ANTO.LN) gaining 0.5%. Rio Tinto PLC (RIO) (RIO) (RIO) , which announced it has appointed a new head of technology and innovation, turned up 0.5%.

The market is now pricing in a 46% chance of a July rate hike from the U.S. Federal Reserve, according to the CME Group's FedWatch tool (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html). The chance of a June hike is at 30%.

"It's the fear of a rate hike from the Federal Reserve next month that really does seem to be calling the shots right now, so although the economic data that's due from the U.S. later today is relatively low key, we should expect this to be under a degree of scrutiny," said Tony Cross, market analyst at Trustnet Direct, in a note.

At the top of the FTSE 100 was Kingfisher PLC (KGF.LN) , as its shares gained 2%. The home improvement retailer posted 5% growth in group sales (http://www.marketwatch.com/story/kingfisher-sales-up-5-trading-in-line-with-views-2016-05-24) for the first three months of its new financial year and said that trading remains in line with expectations.

"It's too early to see the competitive impact of the sale of Homebase to Wesfarmers earlier this year, but this is set to be an increasing challenge. Kingfisher are nicely placed to benefit from a recovery in France and wider Europe, if and when it happens," said George Salmon, equity analyst at Hargreaves Lansdown, in a note.

In other moves, Severn Trent PLC (SVT.LN) shares rose 0.9% after the water and waste water company said its 2016 pretax profit more than doubled (http://www.marketwatch.com/story/severn-trent-pretax-profit-more-than-doubles-2016-05-24) to 322.3 million pounds ($467.1 million).

The pound was up 0.4% at $1.4541 ahead of testimony by Bank of England Governor Mark Carney to a parliamentary committee. The committee session on the BOE's inflation report begins at 10 a.m. London time, or 5 a.m. Eastern Time.

(END) Dow Jones Newswires

May 24, 2016 04:28 ET (08:28 GMT)

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