FTSE 100 notches up first weekly gain of 2016
By Sudip Kar-Gupta
LONDON (Reuters) - Britain's top share index recorded on Friday its first weekly gain for 2016, as a respite to the slump in the oil price lifted the shares of major energy companies.
The blue-chip FTSE 100 index <.FTSE> closed up 2.2 percent at 5,900.01 points. It also rose 1.7 percent over the week - the first time this year it has made a weekly gain.
Nevertheless, the FTSE remains down 6 percent since the start of 2016 and some 20 percent below last April's record high of 7,122.74 points, putting it near "bear market" territory.
Concerns about a slowdown in China - the world's second biggest economy and a major consumer of metals and oils - have hit world stock markets since the start of 2016.
Oil prices have fallen to 12-year lows this month but they managed to recover on Friday, rising sharply and in turn lifting the shares of BP and Royal Dutch Shell .
"In the short term, the FTSE's commodities-led rally has legs and we cannot rule out a move towards 6,000 in the coming sessions," said Jawaid Afsar, senior trader at Securequity.
"However, its medium and longer-term remain uncertain as some serious damage has been done to its technical outlook. The FTSE is still flirting around its 'bear market' territory and a fall below 5,800 could lead to a slump towards the 5,200-5,300 area," he added.
British mining stocks missed out on the market rally, with their shares falling sharply going into the close of trading.
Anglo American slumped 8.6 percent, Glencore weakened by 4.5 percent while Rio Tinto fell 1.1 percent. Some dealers say Anglo could even drop out of the FTSE 100 index if its shares continue to fall.
Several traders mentioned a similar slump in the shares of U.S.-listed miner Freeport as weighing on those stocks, with Citigroup slashing its price target on Freeport ahead of results next week.
Others added that a decision by rating agency Moody's to put 175 oil, gas and mining companies on review for a downgrade was also hitting the mining stocks.
"We see Anglo American as the weakest link in the sector due to its debt burden," said Jonathan Roy at Charles Hanover Investments.
(Additional reporting by Atul Prakash; Editing by Andrew Roche)
