Banks lead the way as resurgent FTSE gives bulls a glimpse of higher plains
BRITAIN’S top share index hit its highest close in 10 weeks yesterday, led by banks after European stress tests passed without major incident, and as strong economic data from the US boosted investor confidence.
The FTSE 100 index ended up 0.7 per cent, or 38.50 points, at 5,351.12, its highest closing level since 13 May.
Banks were the top performers as investors breathed a sigh of relief after the European bank stress tests published late on Friday unearthed no nasty surprises.
Barclays rose 4.5 per cent and led the sector, which had come under pressure on Friday ahead of the results, with Lloyds Banking Group and Royal Bank of Scotland up 3.9 per cent and three per cent, respectively.
Only seven of 91 banks tested — five small Spanish banks, Germany’s state-rescued Hypo Real Estate and Greece’s ATEbank — failed to satisfy the regulators, with an overall capital shortfall of just €3.5bn (£2.9bn).
The FTSE 100 closed above its 50 per cent Fibonacci retracement from a high in April to a low in June at 5,311.89 points, and also ended above its 200-day moving average of 5,328.80.
“As important key levels have been breached on the upside, the opportunity for the bulls to lift the indices higher certainly stands a good chance. But there may be limits on how much further these markets may rise,” said Sandy Jadeja, chief technical analyst at City Index.
London’s blue chips rallied further after data was released showing sales of new US single-family homes rebounded strongly in June from the prior month’s record low, cooling fears of a slowdow in recovery in the world’s largest economy. BP rose 4.6 percent on reports of a new boss.