The UK’s leading stocks saw morning gains evaporate at midday as investors drew in their optimism horns. Tuesday trading had hot off to a stellar start with confidence building that moves by US lawmakers will succeed with their long-mooted $1.9 trillion stimulus package, with President Biden stepping outside Washington in a bid to push through the deal.

Major miners also provided support after the sector saw promising dividend developments amid talk of a commodities supercycle.

But the optimism ebbed away during the late morning as the strengthening pound dragged, leaving gains threadbare. At 12.10pm, the benchmark FTSE 100 had seen gains drift to just 0.1% at 6,764.94, while the mid-cap FTSE 250 sank into the red, losing 0.15% to 21,389.38.

DIVIDENDS BOLSTERS MINING SECTOR

Mining titan BHP (BHP) rose 1.5% to £22.63 after hiking its first half dividend by 55% to a record US$1.01 per share, having reported a rise in profit on higher iron ore and copper prices as well as record production at Western Australia iron ore.

‘Our outlook for global economic growth and commodity demand remains positive, with policymakers in key economies signalling a durable commitment to growth and signalling ambitions to tackle climate change,’ said chief executive Mike Henry.

‘These factors, combined with population growth and rising living standards, are expected to drive continuing growth in demand for energy, metals and fertilisers.’

Mining giant and commodities trader Glencore (GLEN) rallied more than 3% to 291.45p after it said it would resume dividends in 2021 with a payout of 12 cents per share.

Glencore said it had navigated recessionary conditions in the first half of 2020, then benefited from a strong price recovery for most commodities in the second half, to deliver flat adjusted earnings before interest, depreciation, taxation and amortisation (EBITDA) for 2020.

SERCO SURGES HIGHER

Outsourced service provider Serco (SRP) jumped more than 5% to 126.4p on news it is acquiring WBB, a leading US defence business, for $295 million.

Serco said the acquisition will ‘increase the scale, breadth and capability’ of its North American defence business and will give the group ‘a strong platform from which to address all major segments of the US defence services market’.

Shares in Safestore (SAFE) improved 3.5% to 808p as the self-storage group upgraded annual earnings guidance after first quarter revenue rose 11% amid an improvement in occupancy levels and storage rates.

Homewares retailer Dunelm (DNLM) plunged 9% to £12.81 on news deputy chairman Will Adderley has sold 15 million shares to institutional investors at £12.80.

The sale was aimed at ‘achieving greater portfolio diversification on the part of Will Adderley’, though the Adderley family still holds sway at the curtains, cushions and kitchenware retailer with a 43.2% stake.

MARKETS WRAP

Elsewhere, gambling technology provider Playtech (PTECclawed its way 0.8% higher to 488.9p following news that it has signed strategic agreements with Greenwood Racing, which owns and operates the Parx Casino in Bensalem, Pennsylvania.

Defence contractor TP (TPG:AIM) rallied 6% to 6.59p after it signed a contract with a train leasing company to supply hydrogen fuel-cell systems for passenger trains.

Disease test-kit supplier Omega Diagnostics (ODX:AIM) rose more than 5% to 84.68p following the publication of positive research that had analysed the performance of a Covid-19 test that it is helping to produce.

Infrastructure services provider Nexus Infrastructure (NEXS:AIMslumped nearly 8% to 150.1p after it said the Covid-19 pandemic was continuing to hurt its Tamdown unit, with trading in line with its downside scenario for the business.

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Issue Date: 16 Feb 2021