ZFX zinifex limited

zinc up

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    LONDON, Feb 27 (Reuters) - Shares in mining group Vedanta Resources (VED.L: Quote, Profile, Research) surged 7 percent in late trade on Wednesday on a rally in zinc prices and market talk that Chinese investors were building a stake, an analyst and traders said.

    Vedanta, which has the bulk of its operations in India, declined to comment.

    Vedanta shot up 7.3 percent to a high of 22.24 pounds and was trading 6.2 percent higher at 22 pounds by 1603 GMT, making it the top percentage gainer on Britain's FTSE 100 index .FTSE, which was down 0.3 percent. The UK mining index was up 0.8 percent.

    While traders said there was speculation of Chinese buying shares in Vedanta, a London analyst said this was extremely unlikely. "The concept of the Chinese running Indian infrastructure is the stuff of absolute fantasy," said the analyst, who declined to be named. The Agarwal family owns 54 percent of Vedanta and are not interested in selling, he added.

    "The real reason it got going is the zinc price, which is 45 percent of their earnings. They're the most leveraged to that in the UK market."

    Zinc prices MZN3 on the London Metal Exchange raced around 7 percent higher to $2,670/2,675 per tonne amid a rally of base metals as the dollar fell to a record low against a basket of currencies. [MET/L]

    (Additional reporting by Sitaraman Shankar and Dominic Lau)

 
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