FTSE rises for second day as Rio Tinto advances

LONDON (MarketWatch) — The U.K.'s benchmark stock index headed for a second straight day of gains on Thursday, with shares of Rio Tinto PLC rising after the miner committed to a major expansion plan in Australia. Some losses were seen in the home-building sector after the Bank of England said it would curb its support for home loans.

The FTSE 100 index (UK:UKX)  rose 0.1% to close at 6,654.47, adding to a 0.2% gain from Wednesday.

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Rio Tinto (UK:RIO)   (RIO)   (AU:RIO)  climbed to the top of the index, up 3.9%, after the heavyweight miner said it will increase its annual iron-ore output in Australia by around 25%.

Other mining firms were also on the rise, tracking gains for metals prices. Shares of Anglo American PLC (UK:AAL)  picked up 2.7%, Fresnillo PLC (UK:FRES)  added 2.8%, Glencore Xstrata PLC (UK:GLEN)   (GLCNF)  put on 1.7%, and BHP Billiton PLC (UK:BLT)   (BHP)   (AU:BHP)  gained 1.7%.

Shares of home builder Persimmon PLC (UK:PSN)  slid 6.1% after the Bank of England said that in response to the rising housing-market activity it will overhaul its flagship Funding-for-Lending Scheme, or FLS, which offers banks cheap cash as long as they lend to households and businesses. Building supplies and materials group Travis Perkins PLC (UK:TPK)  fell 2.7%.

Shares of Kingfisher PLC (UK:KGF)  slid 4.4% after the U.K. do-it-yourself retailer reported a 1.4% rise in third-quarter same-store sales, but admitted that challenges still remain.

Some banks rose, with shares of Barclays PLC (UK:BARC)   (BCS)  up 1.2%.

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Outside the main index in London, shares of Thomas Cook Group PLC (UK:TCG)  rallied 15% after the travel operator narrowed its full-year loss and laid out further cost cuts as a part of a plan to turn around the U.K. business. Underlying earnings before interest and taxes grew 49%.

Mike van Dulken, head of research at Accendo Markets, said in a note that the EBIT growth was "thanks to more aggressive cost-cutting than guided to/expected by the markets, equating to significant margin expansion, while recapitalization, refinancing and a return to positive cash flow have helped reduce the net debt burden by almost half."

"All music to investors' ears, especially with management claiming that, in terms of strategy implementation to return to sustainable profits, 'we've only just begun'," he added.