FTSE opens high led by miners

A strong opening for UK listed mining companies such as Kazakhmys and Vedanta Resources helped the FTSE 100 to start the week in positive territory, with the UK Index rallying 30 points within the first hour of trading.

Despite some weaker than expected new york manufacturing data the ftse 100 clung onto its early gains to close the day in yet more positive territory.

Most of the early gains were concentrated in the mining sector, which rallied some 1.2% as investors bought into the key mining firms, having seen copper prices rise 1% in early trade. With the mining sector having a heavyweight bearing on the FTSE 100, we can correlate much of the FTSE’s early strength here. Similarly the UK index has received a boost from higher oil firms too on stronger crude oil prices. The FTSE 350 oil sector saw early gains of 0.9%, with BP and Royal Dutch Shell both trading positively and this is also giving the UK index an early lift.

Banking stocks were the worst hit sector in Europe, with shares of HSBC and Barclays lagging the broader rise on the FTSE, falling near 1%.

5400 remains the key resistance level for the FTSE 100 in the near term, though certainly the fact that the UK index has gained over 10% having reached the lows of 4791 early last week, is giving investors some muted encouragement. A consolidated break above the 5400 level could help to restore some much needed confidence into the markets and this could help the FTSE 100 to continue to recover some of the ground lost over the last few weeks as the market crisis intensifies.

Merkel and Sarkozy meeting eyed
The market is watching with anticipation the meeting between Nicolas Sarkozy and Angela Merkel, the French leader and his German counterpart, as the two European heavyweights discuss ways to strengthen the eurozone. The meeting follows Sarkozy’s declaration after last months EU summit that the two nations would come together in August to put forward proposals for a stronger EU governance to combat the market uncertainty over sovereign debt, though with French banks being hit hard last week, the meeting has taken on a much greater significance given the market sensitivity.

There remain a number of options on the table that the market could warm to, chiefly an increase in the amount available in the EFSF (European Financial Stability Fund) to support debt ridden nations. Discussions about the prospect of a Euro Bond appear to be some way off any agreement however, considering the antipathy shown towards such a proposal by German officials. Though with admissions from both german and french officials that the subject of a euro bond was not on the agenda, this emphasises that this remains a contentious issue that is unlikely to be sounded out soon.”