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Mining groups in demand as FTSE jumps nearly 1% on relief at Greek austerity vote

Investors welcome news from Greece, although EuroGroup approval is still awaited

Mining companies are leading the market higher as investors breathe a sigh of relief that – despite tear gas and protests – the Greek parliament approved the contentious austerity measures on Sunday.

The next hurdle is for the EuroGroup to give the go-ahead on Wednesday to release Greece’s €130bn bailout package. Despite some lingering doubts about this, the Monday morning mood is positive. The FTSE 100 is currently 49.34 points higher at 5901.73, with the French and German markets up around 1% and European bond yields edging lower. Simon Denham at Capital Spreads said:

The [Greek] news comes as a relief for investors who are pushing risk assets higher. Having seen a minor break to the downside on Friday once again the buyers have seen the weakness as a buying opportunity and we are firmly back in the narrow trading range of last week.

Anglo American is up 63.5p at £28.10, Kazakhmys has climbed 24p to £11.48 while Vedanta Resources has risen 26p to £12.86. The moves came despite disappointing Japanese GDP figures for the fourth quarter.

But Polymetal has missed out on the rally, falling 18p to £11.06. There has been talk of a proposed merger with fellow Russian miner Polyus Gold, although latest reports suggest that the terms of a deal could not be agreed.

Banks are also in demand, on hopes the eurozone financial crisis could yet be resolved. Lloyds Banking Group has been lifted 0.83p to 35.32p while Royal Bank of Scotland is up 0.34p at 28.25p.

Among the mid-caps, Cable & Wireless Worldwide has jumped 5.53p to 25.28p after Vodafone, up 1.55p at 174.2p, confirmed weekend reports it was thinking of making an offer for the company, a possibility suggested here as recently as November.

Lower down the market Entertainment One, a TV and film production group whose characters include Peppa Pig, has fallen 33.5p to 165.5p. The company said it was no longer up for sale since it had not received any offers which reflected its underlying value. It added that it was looking at making acquisitions itself, and said full year figures were likely to be in line with market expectations. Patrick Yau at Peel Hunt kept his buy recommendation on the shares:

We are surprised by this development, given the strong momentum that has been built in the TV and family businesses, but clearly the market will be disappointed by the news. Although underlying trading has not been deflected by the strategic review process, we fully expect the share price to fall at least back to the 165p pre-bid level in September 2011, if not further.

However, we remain positive on the underlying fundamentals of the business and would see this as a buying opportunity for longer term investors to come on board. © 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