Banks boost FTSE past the 5,400 mark after quiet day

FINANCIAL stocks boosted the UK’s leading share index yesterday, rallying from falls in the previous session following weak US jobs data and supported by energy markers which gained in tandem with crude.

The FTSE 100 was up 78.13 points, or 1.5 per cent, at 5,410.52, having closed 0.6 per cent lower on Friday, albeit in light volumes, with the index having traded just 53 per cent of its 90-day average volume.

“Stocks remain on historically low price earnings multiples, so any weakness presents a good buying opportunity particularly given the robustness of the recent corporate earnings season,” said Jimmy Yates, head of equities at CMC Markets.

The FTSE closed above the 5,400 level for the first time since 13 May.

Banks were favoured among investors following their solid reporting season last week. Barclays put on 3.2 per cent, HSBC and Standard Chartered added 1.4 and 1.5 per cent respectively, while Lloyds Banking Group rose 1.7 per cent.

Insurers were in demand with Prudential, set to unveil its first-half results on Thursday, up 2.7 per cent.

Legal & General, Old Mutual and Aviva, which all reported results last week, rose 2.2 to 3.6 per cent, boosted by price target hikes from Deutsche Bank, UBS and BofA Merrill Lynch respectively.

Rebounding stock markets sharpened appetite for fund managers with Schroders, up 4.2 percent, also helped by BofA Merrill Lynch which lifted its target price after last week's first-half results.

London’s blue chips were back on the front foot after reversing sharply on Friday, following worse than expected non-farm payrolls from the Untied States which cast doubt over the sustainability of the economic recovery.

“We are seeing a lot of speculative buys on optimism that the Fed, when they start meeting tomorrow, will announce some extra stimulus measures to help maintain the US recovery,” said Joshua Raymond, market strategist at City Index.

In the small caps Cyprotex, a pharmaceuticals tester, closed up 18.75 per cent to 4.75p after expanding into the US market through acquiring testing provider Apredica.

The latest Federal Reserve rate decision is due after the London market close today, although no change is expected to US monetary policy yet.

Integrated oils were strong performers. The sector is bouncing back after weakness following BP’s oil spill in the Gulf of Mexico and along with the price of crude, which rose above $80 a barrel.

BP climbed 1.7 per cent. The oil major said the cost of dealing with its ruptured oil well in the Gulf of Mexico has risen to $6.1bn, including $319m in compensation payments to businesses and individuals affected by the spill.

Royal Dutch Shell was up 1.5 per cent and BG Group 1.4 per cent.

Oil services firm Petrofac rose 1.2 percent after it won a $430m contract by Kuwait Oil Company.