THE UK’S main share index rose to its highest level in nearly a month yesterday, bolstered by the outlines of an international compromise to avert a US strike on Syria, while budget airline EasyJet also dragged the FTSE higher.
There was also strength in the resources sector after an upbeat report from miner Glencore Xstrata and robust Chinese data.
Budget airline EasyJet was the biggest gainer in percentage terms, up 7.2 per cent after news from Syria saw airlines benefiting as oil prices fell. An interview by CEO Carolyn McCall also reassured investors.
EasyJet rebounded to its highest level in a month in volume of over twice its daily average, regaining ground lost earlier in September when fears of instability in the region first knocked the stock back. Fellow airline group IAG rose 4.7 per cent.
The FTSE 100 was up 53.25 points, or 0.8 per cent higher, at 6,583.99 by the close. The index has gained 3.1 per cent in 12 days, but remains 3.7 per cent off 13-year highs hit in May.
“We’ve had quite a steep run, and [US Secretary of State] Kerry’s off-the-cuff comments [on Syria’s chemical weapons] seem to have got us into a much better position than anyone could have imagined,” Mike van Dulken, head of trading at Accendo Markets, said.
He said the longer term graph showed some resistance. “Since the big correction in May, there’s a trendline of falling highs to deal with around 6,630, should we push on.”
Shares in Glencore Xstrata rose 2.3 per cent after it upped its forecast for synergies from last year’s merger to at least $2bn for next year from initial guidance of $500m, and hinted at further savings ahead.
Glencore and Rio Tinto, which benefited from a target price upgrade by JP Morgan, led miners higher, and combined to add six points to the FTSE 100.
“The fact that Glencore Xstrata will see synergies in excess of $2bn is giving it a real boost, although there’s still plenty more upside there,” Alastair McCaig, analyst at IG, said.
The mining sector was also boosted after stronger-than-expected industrial output reinforced other signs that China’s economy is stabilising.
Housebuilders including Persimmon were also among gainers after British property prices recorded their fastest rise in almost seven years last month and a measure of sales volumes jumped to a multi-year high. It closed up 0.43 per cent.