Mining shares hit new peak for year
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Your support makes all the difference.MINING SHARES hit a new peak for the year yesterday, bolstered by a surge in base metal prices and increased investor optimism about the prospects for global economic growth next year.
Rio Tinto, Billiton and Anglo-American all closed at record levels, underlining how strongly mining shares have performed this year among the cyclical stocks.
Dealers attributed the renewed investor enthusiasm to sharp increases in commodity prices driven by shortages of supply and economic recovery in Asian markets. Aluminium prices hit a two-year high of $1,621 a tonne while copper was close to a three-month high of $1,835 and nickel closed within a whisker of its 30-month high at $8,230 a tonne.
Rio Tinto and Billiton were among the top three performing stocks in the FTSE 100 Index closing 8.3 per cent and 7.8 per cent higher respectively. Anglo American put on 216p to reach 4266p.
Mining analysts suggested that part of the surge in prices was due to a last-minute rush by fund managers to add to their portfolios before the Christmas shut down.
"If you want to push up prices now is the time to do it." said Robin Bhar, an analyst at the London Metal Exchange dealer, Brandeis.
However, dealers said there was a general air of confidence in the prospects for the mining sector, which had also fed through into other cyclical stocks such as cars, chemicals, steel and construction.
Flemings Global Mining said the outlook for mining stocks was increasingly bullish given the outlook for industrial activity, whilst Credit Suisse First Boston raised its forecasts for Rio Tinto on the strength of higher metal prices and the recovery in the Asian markets, notably Japan.
Some analysts even interpreted the rise in cyclical stocks as a "back to basics" shift by investors, nervous about the heady rise in Internet shares. Net stocks fell back on Wednesday and Cisco Systems forecast that Net sales may grow at a slower pace next year.
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