Mining shares lift Britain's FTSE stock market

* Traders cite doubts over fresh Fed quantitative easing

steps

* Mining stocks dominate FTSE 100 leaderboard

* FTSE 100 ends 4-day losing streak

LONDON, Aug 31 (Reuters) - Britain's benchmark share index

rose on Friday as traders bought mining stocks which had fallen

sharply in previous sessions, although worries that central

banks may inch away from launching new stimulus for the economy

favoured more defensive equity sectors.

The blue-chip FTSE 100 index was up by 0.7 percent,

or 39 points, at 5,758.45 points, ending a four-day losing

streak that had seen the index fall by around 6 percent.

Mining stocks dominated the leaderboard, with Glencore

and Kazakhmys rising by 2.9 and 3.1 percent

respectively.

Shares in Glencore's planned merger partner Xstrata

also rose 2 percent, after both stocks had fallen 3 and 2.5

percent respectively on Thursday on the back of objections from

some investors to the terms of their merger deal.

Investors picked up mining stocks in case a speech by U.S.

Federal Reserve head Ben Bernanke on Friday gives out more

signals of measures to help the economy, such as quantitative

easing, which would boost economically-sensitive shares such as

the miners.

"People are bottom fishing around the miners. They are

high-beta stocks, which means that if the market goes higher,

they will go higher first," said JN Financial senior trader

Adrian Redmond.

However, Redmond said he did not expect any fresh monetary

steps to stimulate growth in the immediate future, from either

the Fed or the European Central Bank (ECB), which has a series

of meetings in September to deal with the euro zone debt crisis.

TOO EARLY TO BUY CYCLICAL STOCKS

Brown Shipley fund manager John Smith also said he did not

expect an immediate launch of new action to fight the global

economic slowdown, leading him to favour more "defensive" equity

sectors such as healthcare or food companies.

Smith favoured stocks such as drinks group Diageo,

healthcare company GlaxoSmithKline, consumer goods group

Unilever and utility National Grid over the

miners at present.

"We are of the opinion that there will be some more QE

(quantitative easing) but we don't see it in the short term.

We've sat on the sidelines. It's a little bit too early to be

aggressively buying cyclical stocks such as the miners," he

said.

Slightly stronger than expected U.S. economic data over the

past two weeks has helped cool expectations of fresh

quantitative easing by the Fed in the near term.

Around 44 percent of investors in a Reuters poll published

on Thursday expected the central bank to embark on a third round

of bond purchases by end-2012, down from 70 percent in a similar

poll last month.

The FTSE 100 could move around 1.5 percent in either

direction depending on how Bernanke's speech pans out, added

James A. Hyerczyk, an analyst at Autochartist.

(additional reporting by Francesco Canepa; editing by Patrick

Graham)

Source: http://news.yahoo.com/mining-shares-lift-britains-ftse-stock-market-111006254--business.html

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