STOCKS: Strong commods drive FTSE to 3 week high

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Britain's top share index reached a 3-week high on Thursday after gaining for a fourth straight session, driven by strength in commodity stocks after a return to growth in China's manufacturing sector.

However, trading volume was thin with U.S. markets shut for the Thanksgiving public holiday.

The Chinese HSBC Flash Manufacturing PMI rose to 50.4 in November, moving above the 50 mark that separates growth from contraction for the first time in 13 months and offering new signs of recovery in the world's No. 2 economy.

"For too long now investors have been fretting over a hard landing for the Chinese economy and the potential that such a fast slowdown in growth would drag everyone else down with it, but recently there have been signs that the world's second largest economy could see growth heading higher again," Angus Campbell, Head of Market Analysis at Capital Spreads, said.

The mining and energy sectors together added about 7.5 points to the UK benchmark index, around a fifth of the total advance, cheered by prospects of stronger future demand from top commodity consumer China.

Among the miners, Xstrata rose 1.7% and commodities trader Glencore gained 2.0% as Europe's antitrust regulator announced it had approved the firms' planned $33 billion merger.

But while China's economy showed recovery, the picture in Europe remained gloomy, with the Markit Flash euro zone Composite PMI reading falling to 45.8 in November, down from 46.0 in the previous month.

"European economic data remained something of a turkey, leaving question marks over the path for the markets in the run-up to Christmas with indicators suggesting a possible year-end target of 5,600 for the UK blue chip index" said Mike Mason, senior trader at Sucden Financial Private clients.

Meanwhile, British factory orders improved slightly in November, helped by better demand for exports, the CBI's monthly industrial trends survey showed on Thursday. However, the total order book balance of -21, up from -23 in October, was below expectations of a reading of -19.

EXPORTS BREW

Strength in exports helped brewer SABMiller to top the blue chip leader board, up 6.4% and adding over 6 points alone to the FTSE 100, as strong sales in Latin America drove a 12% rise in first-half profits and enabled it to hike dividends.

CFD specialist Prime Markets noted that gains in SABMiller was backed up by an exceptionally strong chart configuration for the stock, highlighted by a decisive bounce from its 200-day moving average.

The FTSE 100 index closed up 39.00 points, or 0.6%, at 5,791.03, extending its gains for the week so far to almost 3.3%, on track to at least match the year's best week so far, in May, when it also gained 3.3%.

Over the year, however, the UK blue chip index is up only 3.9%, sharply underperforming compared to a rise of over 10% by the French CAC and nearly 23% by Germany's DAX.