FTSE gains on broad-based rally led by banks and miners
A BROAD-BASED rally in the stock market saw Britain’s top share index recording gains for a sixth straight day, with banks leading the surge and commodity shares jumping on stronger crude oil and metal prices.
The FTSE 100 index ended 54.87 points, or 1.3 per cent, higher at 4,443.62 — the highest close since 11 June. On Friday, it posted its best weekly rise since early January.
“Oils and other commodities gained yet again as risk appetite returned to the market, dragging the US dollar lower,” said Jimmy Yates, head of equities at CMC Markets.
Banks roared ahead after US lender CIT Group’s tentative deal with bondholders, improving sentiment. HSBC, Standard Chartered and Royal Bank of Scotland rose 1.6 to 3.6 per cent.
Lloyds Banking Group jumped 6.7 per cent, also supported by a newspaper report saying it would post a first-half profit.
Insurers got a boost from Morgan Stanley, which raised its rating on the European insurance sector to “two per cent overweight” from “neutral”.
Aviva, Legal & General, Old Mutual and Prudential put on between 2.9 and 7.6 per cent respectively.
Friends Provident gained 2.4 per cent after financial buyout firm Resolution sweetened its proposed offer for the company.
Energy stocks were in demand as crude rose 0.2 per cent to trade above $63 a barrel during trading yesterday.
BG Group, Cairn Energy, BP and Royal Dutch Shell climbed between one and 1.7 per cent.
Mining shares were in demand as metal prices rose, with copper MCU3 hitting a nine-month high on improved economic outlook.
Randgold Resources, BHP Billiton, Eurasian Natural Resources Kazakhmys and Antofagasta rose between 2.8 per cent and 7.6 per cent.
Rio Tinto jumped 3.7 per cent as Cazenove resumed its coverage on the Anglo-Australian miner with an “outperform” rating.
GlaxoSmithKline rose 2.6 per cent after the success of its partner firm in a lupus drug clinical trial which, if turned into a blockbuster drug, could see profits being split between GlaxoSmithKline and partner Human Genome Sciences
“All eyes will now be on the psychological 4,500 mark,” said Anthony Grech, market strategist at IG Index. “If the FTSE can crack this level and traders start to see it as a support for gains rather than a ceiling for profit, we may be in for a ride up to the 4,700 point in the coming weeks.”