* FTSE rises 0.2 percent
* Glencore (Xetra: A1JAGV – news) knocked by low coal prices
* Commodities, Fed meeting in focus
* Kingfisher (LSE: KGF.L – news) shares fall after H1 results (Adds quote, detail)
By Alistair Smout and Sudip Kar-Gupta
LONDON, Sept 15 (Reuters) – Britain’s top equity index edged higher in thin trade on Tuesday, as a strong start to trade on Wall Street helped lift mining stocks off their lows, including Glencore, which hit another all-time trough early in the day.
Mining and commodities trader Glencore slumped almost 8 percent early on after three leading global thermal coal price benchmarks fell below levels last seen during the global financial crisis of 2008-2009.
Coal prices have been knocked by a sharp slowdown in demand, especially in Asia, and by stubbornly high mining output.
Other miners also fell, but the sector cut its losses to trade just 0.3 percent down after a strong start on Wall Street following good economic data. Glencore was last down 2.4 percent.
Traders said Glencore’s exposure to coal explained its underperformance against its peers. The stock has fallen to a series of record lows since July.
“The fact they straddle so many different production spheres within commodities has meant they’re getting hit most days, and the sentiment towards them is weak,” Alastair McCaig, market analyst at IG (LSE: IGG.L – news) , said.
The blue-chip FTSE 100 index edged 0.2 percent higher to 6,097.23 points by 1344 GMT. The FTSE hit a record high of 7,122.74 points in April but has since been hit by signs of an economic slowdown in China and the prospect of a Fed rate rise, with commodity stocks leading the falls.
The gains came in very thin trade, however, with the FTSE 100 seeing less than 50 percent of its 90-day average volume traded with less than two hours remaining in the session.
Traders said volumes were likely to remain light before the most closely watched U.S (Other OTC: UBGXF – news) . Federal Reserve meeting in years on Sept. 17. The Fed must decide whether to raise interest rates for the first time since 2006.
“The worst thing that they can do would be a ‘hawkish hold’. That is, if they don’t do anything, while saying that conditions are improving. That would…put us back to square one, and markets would remain very volatile,” said Ioan Smith, director at KCG Europe.
“They either need to surprise to the dovish side and rule out a hike in Q4 or they need to hike.”
A hike could put pressure on the Bank of England to follow suit. Higher rates often hurt stock markets by boosting the appeal of bonds and cash, where returns have been hit by the record low interest rates set by major world central banks since the 2008 global financial crisis.
But tightening by the Bank of England was seen as less likely after British annual inflation fell back to zero in August, ensuring price growth remained far slower than the central bank’s target.
In other stock movers, home improvements retailer Kingfisher (Amsterdam: KF6.AS – news) retreated 3.1 percent after a fall in first-half adjusted pre-tax profits.
However, chip designer ARM rose 2.6 percent, the top FTSE 100 riser, after it said trading was in line with expectations. (Editing by Hugh Lawson)
