London Markets: Miners lift FTSE 100, but pound strength keeps gain in check

U.K.-listed miners revved higher Monday in the wake of inflation data from key metals buyer China, but strength in the pound kept a lid on gains for the broader FTSE 100 benchmark.

The FTSE 100 index

UKX, +0.07%

 was up 0.1% at 7,544.99, led by the basic materials group, but utility and consumer goods shares were among declining sectors. The index on Friday fell 0.3% but logged a weekly gain of 0.2%.

Miners gain ground: Mining stocks were pushed up after China’s producer prices leapt 6.9% in September compared with the same period a year ago, according to the government’s statistics bureau, beating a 6.4% forecast by economists.

Metals prices rose following the report, which indicated resilience in the world’s second-largest economy. Copper futures

HGZ7, +2.25%

 moved up more than 2%, and palladium futures

PAZ7, +1.31%

 rose more than 1% to trade above $1,000 an ounce.

Shares of copper producer Antofagasta PLC 

ANTO, +2.96%

 bulked up 3.5%, and Anglo American PLC

AAL, +2.35%

 tacked on 2.5%. Glencore PLC 

GLEN, +1.94%

 added 2.2%, while Rio Tinto PLC

RIO, +2.41%

RIO, +4.01%

RIO, +3.43%

 advanced 2.9%.

“The PPI is what’s important for global inflation, since China exports so much. The jump in Chinese PPI inflation does make it marginally more likely that Western countries will hit their inflation targets,” said Marshall Gittler, chief strategist at ACLS Global, in a note.

Sterling strength: The pound

GBPUSD, +0.1430%

 bought $1.3310 on Monday, compared with $1.3285 late Friday in New York. That move came ahead of an expected Monday night dinner in Brussels to be attended by U.K. Prime Minister Theresa May, the EU’s chief Brexit negotiator Michel Barnier and European Commission President Jean-Claude Juncker.

May reportedly is aiming to break a deadlock between Britain and the EU in Brexit talks before this week’s EU summit.

But pound strength did exact a toll on some shares of multinational companies that generate most of their earnings overseas. Shares of consumer products maker Reckitt Benckiser Group PLC

RB., -1.18%

  fell 1.2%, paper manufacturer Smurfit Kappa Group PLC

SKG, -1.19%

gave up 1.1%, and liquor maker Diageo PLC

DGE, -0.67%

 shed 0.6%.

Sterling could move even higher after U.K. inflation data for September is released on Tuesday, as scheduled.

“With the market already pricing in a 71% likelihood of a rate hike at the next Bank of England meeting in November, an acceleration in inflation – as the market expects – would cement peoples’ views” and possibly push the pound higher, said Gittler.

Stock movers: ConvaTec Group PLC

CTEC, -22.23%

 plunged 21% after the medical technologies company cut its full-year sales forecast. It said its third-quarter performance was severely impacted by supply issues in both its advanced wound and ostomy care lines, and byu a lower-than-anticipated revenue contribution from new products.

Shares of oil producer Royal Dutch Shell PLC

RDSB, -0.19%

RDS.B, +0.59%

 were down 0.2%, while rival BP PLC

BP., +0.42%

BP, +0.23%

 rose 0.4%. Oil prices

CLZ7, +1.35%

 rallied Monday amid questions about tighter supply after U.S. President Donald Trump said Friday he’s decertifying the U.S. nuclear deal with Iran. Tensions between the Iraqi central government and the Kurdish semi-autonomous region also sparked concern among investors of possible disruption in future oil supplies.