UK shares surge on signs of U.S. restart, Rio Tinto results


Britain’s stock markets jumped on Friday as investors cheered plans for a gradual restarting of the U.S. economy and encouraging data on possible treatment for the COVID-19 disease.

The commodity-heavy FTSE 100 index .FTSE rose 2.5%, with shares in the world’s top iron ore miner Rio Tinto Ltd (RIO.L) (RIO.AX) gaining 5.2% after it posted higher-than-expected quarterly production.

Peers BHP Group (BHPB.L) and Glencore (GLEN.L) added more than 5%, leading the wider mining index .FTNMX1770 up 4.6%.

Markets globally took heart as the United States joined other countries in planning lockdown exit measures with a staggered, three-stage approach following weeks-long lockdown that has severely damaged business activity.

Further helping the mood, a media report detailed positive partial data from trials of U.S. drugmaker Gilead Sciences Inc’s (GILD.O) experimental drug in severe COVID-19 patients.

“There’s a lot of hope in the market that things might go back to normal slowly,” said Keith Temperton, a sales trader at brokerage Tavira Securities.

“It’s a bit presumptive. We know the governments will try and open up economies, but supply chains are going to be hampered for longer and consumer will be far more reluctant to get back to normal.”

Still, the positive sentiment helped investors look past data showing China’s economy shrank in the March quarter for the first time since current records began almost three decades ago. [nL3N2C4164]

The domestically focused midcap index .FTMC rose 2.8%, with shares in Cineworld (CINE.L) surging 17%. Travel and leisure stocks .FTNMX5750, among the worst-hit this year, gained 5.5%.

However, both the FTSE blue-chip and midcap indexes are on track to post modest weekly losses as UK on Thursday extended its lockdown for another three weeks.

A raft of stimulus measures has helped the FTSE 100 recover about 18% from its March lows, but it is still down nearly 25% from its January high.

Primark owner Associated British Foods (ABF.L) rose 3.4% after saying it was eligible to access funding under the UK government’s Covid Corporate Financing Facility.

Real estate agent Foxtons (FOXT.L) jumped 11.7% after it proposed a share sale and furloughed about 750 of its employees to shore up its finances.

Hotel operator Whitbread rose 8.4% after confirming it was able to access the government’s funding facility.