Mining stocks improved amid hopes that new Prime Minister Julia Gillard will have a more favourable tax regime than the proposed resource super-profits tax.

Driven by solid gains among industry players most affected by the RSPT, the mining index increased 1 per cent yesterday and stocks also rallied in London last night.

The positive moves helped narrow a fall in the overall market, which initially improved on the switch of prime ministers before falling back in the afternoon.

However, the gains were a portion of the $15 billion wiped from mining stocks after the announcement of the controversial 40 per cent profits tax on May 2. This shows there is still considerable uncertainty about what lies ahead.

"Resources stocks were up across the board," David Halliday at Macquarie Private Wealth said Thursday.

"It's got to be expected that the government is going to dramatically restructure the tax, or defer it until after the election. Either one of those, particularly the first one, is a positive for resources stocks."

Investors and players in the mining sector were open to Ms Gillard's offer to negotiate with the industry over the key terms of the RSPT proposal.

In early London trade last night, Rio Tinto Group jumped as much as 1.4 per cent to 3437 pence, BHP improved up to 2 per cent to 1990 pence, and Xstrata Plc went up as much as 1.7 per cent to 1035.5 pence.

The S&P-ASX 200 finished 6.4 points lower, while the Australian currency climbed slightly, from US86.90c to US87.30c.