By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- U.K. stocks extended gains into a ninth
straight day on Tuesday, with Severn Trent PLC soaring after bid
news, while miners added pressure after a sector downgrade.
The FTSE 100 index added 0.8% to 6,686.06, the highest closing
level since October 2007.
Shares of Severn Trent jumped 14% after the water-utility firm
said it received a "very early stage" bid approach, although no
proposal has been made.
United Utilities Group PLC tracked Severn Trent higher and
gained 2.8%.
Mining firms, however, added pressure in London, after Barclays
cut the European mining sector to negative from neutral.
"In the longer term we believe the building blocks that made up
the supercycle are gently being removed. Supportive Chinese
demographics, investment led economic growth and availability of
easy credit, lack of investment in mine supply, and difficulty in
bringing it to market are all now either leveling out or
reversing," the analysts said in a note.
"In the second half, fear is likely to become reality with
[about] 70% of the additional volume of iron ore and copper
scheduled for 2013 arriving in the next six months. It is happening
when the broader demand picture is deteriorating and Q3 is a
seasonal soft time for metals markets," they added.
Specifically, Barclays cut Rio Tinto PLC (RIO) to equal weight
from overweight, sending the shares 1.1% lower. Vedanta Resources
PLC was also lowered to equal weight, its shares falling 2%. Metals
prices were mostly lower.
Shares of platinum producer Lonmin PLC sank 7.3%, after the firm
said it suspended work at its Marikana strike after a strike.
TUI Travel PLC slipped 0.9% after J.P. Morgan Cazenove cut the
holiday firm to neutral from overweight.
Babcock International Group PLC put on 6.8%, after the
engineering support-services firm reported a rise in fiscal
full-year pretax profit and said it sees strong progress this
year.
BG Group PLC added 3.5% after the energy firm said it is
shifting focus back to exploration and liquefied natural gas, while
cutting back spending on big developments.
Shares of BP PLC (BP) put on 0.6% and Royal Dutch Shell PLC
(RDSB) added 1%, even as both oil firms confirmed their offices had
been raided as part of an EU investigation into suspicious price
fixing. BP and Shell said they were cooperating with the
investigation.
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