Market Report: Weak Chinese data dents mining stocks

Smartphone microchips and cheap clothes won the battle against weak manufacturing data as the FTSE 100 had its best day in more than three and half months. Investors flooded in to equities across Europe and even weaker-than-expected Chinese manufacturing figures and poor German data could not stop the charge.

The FTSE 100 climbed 125.5 points to 6406.12 – a 2 per cent rise. The last time the bluechip index beat this was a 2.2 per cent rise on 2 January. But it is still well below this year's high of 6529.41 on 14 March. Sunshine may have helped give investors a brighter outlook, but stocks were up across Europe as speculation grew that the region's central bank will cut interest rates.

Brenda Kelly, a market commentator at IG, said: "Data this poor would ordinarily send equity investors fleeing for the exits; yet coupled with the easing inflation picture in the eurozone it is deemed positive for risk assets as it may well give additional room for the ECB to cut rates next month."

The microchip maker Arm Holdings was top of the tree up 11.85 per cent – or 103p – to 972p after it reported a 28 per cent rise in first-quarter sales to £170.3m.

AB Foods, the owner of Primark, the purveyor of cheap clothes, added 149p to 1,999p after revealing operating profits up 55 per cent to £238m for the six months to the beginning of March.

The weak Chinese data did manage to dent the mining stocks and Mexican metal miner Fresnillo was the biggest loser – down 24p to 1,092p while Chilean miner Antofagasta declined 8.5p to 884p.

French's Mustard owner Reckitt Benckiser was lifted when analysts at Bank of America Merrill Lynch rated it a buy and said the consumer goods giant will snap up new brands and products. They think its second-quarter results will show sales growth of 6.2 per cent on the back of "strong innovations". They gave the Vanish to Calgon owner a 5,250p price target and it cleaned up 77p to 4,723p.

Over on the midcap index, news of an oil find at Premier Oil's North Sea's Bonneville project and a gas discovery at its Matang project in Indonesia helped the explorer up 14.7p to 365.8p.

Analysts at Numis think the price presents a "buying opportunity after recent weakness" and they rate the stock a buy with a 455p price target, and said they "remain confident that Premier will meet conservative production guidance".

But Liberum Capital's exploration experts were bearish on Premier's news. They admit the discoveries are "encouraging" but they think the impact on valuations is "limited". They rate the stock a sell with a 313p price target.

Electrical engineering firm Spectris took the top spot on the mid-tier index following an upgrade by Citigroup's analysts to buy. It suffered a sharp fall on Friday when it revealed growth below forecasts. Citi gave it a 2,413p price target for shares that were up 127p to 2,007p.

Electrocomponents was charged by an upgrade from RBC Capital. The analyst said it is in "good shape" and it powered up 12.3p to 241.1p.

Engineering software specialist Aveva, 96p better off at 2,159p, reported a strong second half and expects its full-year results to be in line with consensus.

Small cap department store group Beale hired furniture manufacturer Airsprung Group's chairman, Stuart Lyons, as non-executive director. He has experience of department stores – he previously worked for the group that owned the Allders chain. Mr Lyons replaces Simon Peters as the representative of Andrew Perloff's Panther Securities which, via a number of holdings, owns nearly 30 per cent of the struggling retailer that trades as Beales.

Over on AIM, Rialto Energy said it had secured Vitol as partner in West Africa. The deal means Rialto will retain its exposure to the Starfish-1 well in Ghana that is expected, according to the operator Ophir Energy, to spud in June. It gushed up 0.72p to 4.2p.

DekelOil, a palm oil project operator in Côte d'Ivoire, gained 0.02p to 1.05p on news it had started on site at a crude palm oil extraction mill project.