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Mining shares lead the way as FTSE 100 boosted by Federal Reserve rate hopes

Investors shake off eurozone worries after US says cheap money could stay until at least 2014

Mining shares led the way as markets welcomed the Federal Reserve’s comments about low US interest rates extending into 2014.

The report left the dollar languishing and boosted gold, silver and other commodities including copper, all priced in the US currency. So investors moved back into the market, also encouraged by hopes of a successful outcome to the talks between Greece and its private bondholders. Worries about further contagion in the eurozone – with Portugal next in the firing line if it is not there already – were put on the backburner.

Despite some disappointing US new home sales, the FTSE 100 finished 72.20 points higher at 5795.20, a new six month high.

Vedanta Resources rose 100p to £12.52 while Randgold Resources was 345p better at £71.70 and Rio Tinto added 181.5p to £38.93.

Kazakhmys, which reported copper production of 299,000 tonnes last year – in line with expectations – and said it expected a similar outcome in 2012, climbed 81p to £11.94.

Polymetal, the recently listed Russian precious metals miner, put on 83p to £11.52, despite knocking back reports it was in talks with gold miner Polyus about a possible merger. It said:

The company would like to confirm that it is not engaged in any discussion with Polyus with regards to a proposed transaction between the company and Polyus.

Still with Russia, Petropavlovsk put on 75.5p to 772p after the gold miner pleased investors by forecasting an 11% rise in output in 2012.

But Morrisons lost 3.6p to 292.1p as it took over the leases of 10 former Best Buy stores in the UK from Carphone Warehouse. It will spend £15m in turning them into stores for its mother and baby products brand

J Sainsbury slipped 0.5p to 289.2p after a store tour for investors this week. ING analyst Jan Meijer said the tour including a newly extended sort at Osmaston Park, with space more than doubled to 68,000 square feet:

While this was cited as an example that has worked very well, we are somewhat sceptical about building large hypers and extending them.

We have four take-aways: the contents are very comparable to the store tour in Crayford in February 2011; the impact of petrol prices is huge and will continue to impact volume growth; increasing non-food square footage is not in line with ING expectations on falling sales densities; will property profits become more important in the profit and loss account going forward?

Imperial Tobacco, fuelled earlier in the week by talk of possible bid interest from Japan Tobacco, fell back 10p to £22.53.

IT group Misys fell 20.2p to 305.3p after it reported disappointing revenues of £197m and a 9% fall in operating profits to £30m, as its struggling financial sector customers delayed their planned orders. Misys has put in place contingency plans for up to £8m of cost cuts if the uncertainty continues.

Finally Servoca jumped 1.5p to 5.75p. The recruitment, security and outsourcing group reported full year profits of £1.8m, down from £2m. It said its move to increase its outsourcing businesses – domiciliary care and security services – has helped to make up for the fall in its nursing and education recruitment divisions due to the government’s spending cuts. In the past three years or so, around £3.4m of profit from its established public sector businesses have disappeared, forcing the company into new areas.

It is opening new branches in domiciliary care as it wins more business. In its security division, it already supplies services to Chelsea football club and is hopeful of winning business from Wembley stadium as well as a couple of Championship clubs. Although not directly involved in the Olympics, it could benefit from increased business from some of its railway company customers as tourists flood onto the transport system to visit the games.

House broker FinnCap is forecasting steady revenues of £48m for the current year, but a decline in profits to £1m to reflect the uncertain market conditions. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds