THE LONDON REPORT
LONDON’S leading shares ended 1.4 per cent higher yesterday, boosted by a rebound from miners and banks, with retailers Next and Marks & Spencer also higher after posting forecast-beating figures.
At the close, the FTSE 100 was up 70.68 points at 5,107.89, recouping all of Tuesday’s losses when the index fell 1.3 per cent to its lowest closing level in a month.
A rebound by mining stocks added the most weight to the blue chip rally, reflecting a rise in metal prices on the back of a weaker dollar ahead of the Federal Reserve’s statement on interest rates and the economy.
Fresnillo, Kazakhmys, Antofagasta, Xstrata, BHP Billiton and Vedanta Resources were up 3.3 to 9.2 percent.
Banks recovered from Tuesday’s sharp falls as investors re-evaluated the outlook for the sector following the £31bn in funding from the government agreed for Lloyds Banking Group and Royal Bank of Scotland.
RBS added 1.5 per cent, while Barclays, HSBC and Standard Chartered gained 1.4 to 4.2 percent. But Lloyds shed 1.2 per cent as its record £13.5bn rights issue weighed on it.
On Thursday, the Bank of England is forecast to raise its quantitative easing policy and keep interest rates unchanged. The British services sector showed its strongest activity since the start of the credit crunch in October 2008, the CIPS/Markit services PMI data showed. British consumer morale hit its highest levels in the last two months since April 2008, according to the Nationwide Consumer Confidence Index.
Next was a top blue chip gainer, adding 5.6 per cent after the high street retailer reported better-than-expected third-quarter sales and upgraded its sales and profit guidance for the balance of the year.
Retail rival Marks & Spencer put on six per cent, as it posted flat first-half profits, near the top end of forecasts as tight management of costs and stocks offset weak sales.
Among other blue chip gainers, Aviva led life insurers higher, adding 5.5 per cent, with the firm shrugging aside results that were slightly below forecasts as investors reacted positively to its solvency position.