Mining merger talks see FTSE 100 end week on high

The FTSE 100 ended a record-breaking week in fine style, pushing back towards record levels, boosted by a possible mega-mining deal and a rebound in the oil price.

The FTSE 100 index closed up 79.91 points, 0.8%, at 10,124.60.

The FTSE 250 index ended up 144.50 points, 0.6%, at 23,036.80, and the AIM All-Share was up 5.57 points, 0.7%, at 790.42.

For the week, the FTSE 100 rose 1.7%, the FTSE 250 firmed 2.8% and the AIM All-Share advanced 3.1%.

Renewed merger talks between Rio Tinto and Glencore sparked gains across listed miners, with M&A seen as key to sector growth.

The discussions, confirmed by Glencore late Thursday, will likely take the form of an all-share merger, structured as Rio Tinto acquiring Glencore via a court-sanctioned scheme of arrangement.

Under UK takeover rules, Rio has until February 5 to announce a firm intention to make an offer.

Glencore jumped 9.6% on the news, leading the FTSE 100 risers, but Rio Tinto fell 3.0%. Other miners gained, with Antofagasta up 4.1%, and Anglo American, which has merged with Canada’s Teck Resources, up 2.7%.

Bank of America said it was “not surprised” by the talks, saying the sector has reached a point where organic growth and portfolio pivots are increasingly difficult for miners of Rio and Glencore’s scale.

“M&A, while not without its risks, mitigates other risks such as project delays, capex overruns and technical issues in ramp-up,” the broker said.

The discussions are the second round of talks in just over a year between the two companies, after Glencore approached Rio Tinto in late 2024, but a deal did not proceed.

RBC Capital Markets said the logic of a Rio–Glencore combination rests almost entirely on copper.

“Glencore offers immediate scale, operating cash flow and a deep copper pipeline, while Rio brings balance-sheet strength,” RBC said.

Elsewhere, BP and Shell rallied 2.4% and 3.0% respectively as the oil price bounced.

Brent oil traded at 63.42 US dollars a barrel at the time of the London equities close on Friday, up from 61.12 US dollars late Thursday.

David Morrison, senior market analyst at Trade Nation, said the oil rebound follows heightened geopolitical risk, including renewed US threats toward Iran and continued efforts by the Trump administration to exert control over Venezuela’s energy sector.

Markets are also factoring in the potential impact of new sanctions targeting buyers of Russian oil, alongside expectations that commodity index rebalancing could bring fresh inflows into crude, he said.

“Despite the recent rally, sentiment remains cautious, with expectations for a sizeable surplus of crude oil later in the year continuing to hang over the market,” he added.

In European equities on Friday, the CAC 40 in Paris closed up 1.4% while the DAX 40 ended 0.5% in Frankfurt, after hitting an all-time high.

In Paris, L’Oreal climbed 6.3% as UBS upgraded to “buy” while BNP Paribas firmed 5.7% as JPMorgan upgraded to “overweight”.

Stocks in New York were higher at the time of the London close on Friday.

The Dow Jones Industrial Average was up 0.4%, heading towards 50,000, the S&P 500 was 0.5% higher and the Nasdaq Composite advanced 0.7%.

US markets were weighing mixed US jobs data and news that the US Supreme Court decided not to release a ruling on the legality of Donald Trump’s tariffs.

The keenly awaited US jobs figures showed total nonfarm payroll employment increased by 50,000 in December, down from a revised 56,000 in November and below the FXStreet-cited consensus of 60,000.

November’s total was revised down from 64,000, while October was revised down by 68,000, from minus 105,000 to minus 173,000, meaning employment in October and November combined is 76,000 lower than previously reported.

But the weak payroll data was offset by news that the unemployment rate edged down to 4.4% from a revised 4.5% in November and below the FXStreet-cited consensus of 4.5%.

Wells Fargo analysts commented: “On balance, we do not believe today’s employment report meaningfully changes the outlook for US monetary policy. The cooling in the labour market still appears to be proceeding at an orderly and gradual pace, which likely will leave the FOMC on hold at its upcoming meeting on January 28.”

Nonetheless, with the unemployment rate “still above our estimate of full employment, underlying inflation slowly cooling and the policy rate setting above neutral, we remain of the view that a couple more rate cuts this year is a reasonable base case,” the broker added.

Morgan Stanley now looks for 25 basis rate cuts from the Fed in June and September, as opposed to its earlier call for cuts in January and April.

“Given the improved economic momentum and the decline in the unemployment rate, we see less need for near-term cuts to stabilise the labour market,” the broker said.

“Instead, we now think the Fed will cut rates as it becomes clear tariff pass-through is complete and inflation is decelerating toward the 2.0% target,” Morgan Stanley added.

The yield on the US 10-year Treasury was quoted at 4.17% on Friday, trimmed from 4.18% on Thursday. The yield on the US 30-year Treasury was at 4.83%, narrowed from 4.85%.

The pound was quoted at 1.3407 US dollars at the time of the London equities close on Friday, down from 1.3431 US dollars on Thursday.

The euro was lower at 1.1631 US dollars from 1.1657 US dollars. Against the yen, the dollar was trading at 158.06 yen, up from 156.93 yen.

Back in London, J Sainsbury endured another tricky day, down 5.8% after mixed third-quarter trading.

The food retailer, which fell on Thursday after rival Tesco’s trading update, slid again after weak non-food sales offset a strong food showing.

Sales at Argos and in clothing and general merchandise fell short of hopes, leaving some analysts questioning whether Sainsbury should ditch Argos altogether.

Dan Coatsworth, head of markets at AJ Bell, said: “Sainsbury’s clearly had a bumper Christmas for grocery sales, enjoying notable success with its premium range. However, Argos continues to be the thorn in its side with another period of weakness.”

The persistent underperformance only “strengthens the argument for Sainsbury’s to get shot of Argos as fast as it can”, he added.

Elsewhere, Fresnillo rose 1.9% after the latest gains in the gold price, while Marks & Spencer gained a further 2.4% on upbeat commentary following Thursday’s well received trading news.

Gold traded at 4,504.56 US dollars an ounce at Friday’s close, up against 4,457.01 US dollars on Thursday.

The biggest risers on the FTSE 100 were Glencore, up 39.6 pence at 452.6p, Antofagasta, up 137.0p at 3,473.0p, Auto Trader, up 21.8p at 593.6p, Shell, up 78.0p at 2,640.0p and Anglo American, up 84.0p at 3,126.0p.

The biggest fallers on the FTSE 100 were J Sainsbury, down 17.40p at 311.60p, Endeavour Mining, down 204.0p at 3,894.0p, Rio Tinto, down 188.0p at 6,006.0p, IAG, down 11.80p at 424.10p, and Vodafone, down 2.45p at 101.20p.

Monday’s local corporate calendar has a trading statement from Oxford Nanopore Technologies.

Later in the week, trading updates are due from housebuilder Persimmon and Premier Inn owner, Whitbread.

Next week’s global economic calendar has US inflation data, eurozone industrial production figures and a UK GDP print.

– Contributed by Alliance News