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Mining sector holds FTSE 100 back as index retreats from yesterday’s levels

On an otherwise uneventful opening on Wednesday, the FTSE 100 retreated from yesterday’s levels as trading got underway.

The UK’s foray above 7,100 didn’t last long. After the bell it dropped by 0.5%, returning the index to the 7,070 mark it has become so familiar with this June.

Rising inflation in China – up from 0.9% in April to 1.3% in May – can shoulder some of the blame, causing a flurry of losses in the FTSE 100’s mining sector. Most notably, Rio Tinto, Anglo American and Antofagasta were all down more than 1.2%.

“That increase in the Chinese CPI readings could be a precursor to a sharp jump in the US figure tomorrow afternoon, even though forecasts have both the standard and core figures pulling back to 0.4% apiece,” said Connor Campbell, financial analyst at Spreadex.

“Investors were more optimistic about the travel and leisure sector on increased hopes that many travel restrictions will be lifted soon. The US Centers for Disease Control and Prevention has relaxed travel advice for more than 110 countries and territories, thereby increasing the earnings prospects for companies that provide transport or accommodation,” said Russ Mould, investment director at AJ Bell.

Hotel stocks Whitbread and InterContinental Hotels were both among the biggest risers on the FTSE 100 and airline stocks across Europe were in demand, including Air France, Lufthansa and International Consolidated Airlines.

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“These companies need all the good news they can get, given how so many other businesses have put Covid in the rear-view mirror and are making plans for the future. Travel and leisure companies have been stuck in survival mode and desperately want to move forward,” Mould added.

FTSE 100 Top Movers

Just Eat Takeaway (3.47%), Smith and Nephew (2.89%) and IAG (2.86%) are the biggest three risers on the FTSE 100 during the morning session on Wednesday.

At the other end, miners Thungela Resources (-2.91%) and Evraz (-2.91%), and homebuilder Persimmon (-2.76%) have seen the biggest falls.

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