London Markets: Miners and oil companies climb in London amid hopes coronavirus is slowing

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The FTSE 100 posted moderate gains on Wednesday, lifted by shares of mining stocks and oil companies, after indications that China’s coronavirus outbreak may be starting to slow.

The index UKX, +0.24%  rose 0.3% to 7,522.11, while the pound GBPUSD, +0.2625%  rose 0.2% to $1.2982.

Driving gains across global markets for Wednesday was news that in China coronavirus infections had dropped again, though the death toll rose to 1,100 as the country reported 97 more deaths over the last 24 hours. The outbreak has raised concerns about slowing growth from the country as many factories, which are key links in global supply chains, remain idle in an attempt to keep the epidemic from spreading.

“It’s now hoped that, as far as the economy is concerned, we’re just facing a bad quarter that could wipe around 1% off full year Chinese growth. I’m sure the data over the coming weeks will enlighten us further on this but, should that turn out to be true, that seems perfectly manageable,” said Craig Erlam, senior market analyst at OANDA Europe, in a note to clients.

But he also cautioned that investors want to be careful of getting too excited over the signs of fewer reported cases, noting that it still may be early days for the virus.

As China is also a huge consumer of commodities, the news gave a lift to related companies. Mining stocks led the gains in London on Wednesday, with Anglo American AAL, +3.68% AAL, +3.68% AAL, +3.68% up nearly 3% and Rio Tinto RIO, +0.79% RIO, +2.49%  rising over 2%. Anglo American was upgraded to neutral from sell by UBS.

Major oil companies were the second-biggest sector on the move higher, as crude prices also climbed. Heavily-weighted BP BP, +0.99% BP, +0.30%  and Royal Dutch Shell RDS.A, +1.17% RDSA, +0.72%  were up around 1.5% each.

On the downside in London, shares of Ocado Group OCDO, -3.47%  fell 3%, giving back much of Tuesday’s gains after the online grocer posted a wider loss for fiscal 2019, but gave an upbeat assessment of the year ahead.

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