Banks hoist FTSE back above 6,000 after a losing streak

BANKS, lifted by upbeat broker comment, helped hoist Britain’s top share index back above the 6,000 level yesterday as investors shrugged off Eurozone debt worries for the time being.

The FTSE 100 index closed up 57.73 points, or 1 per cent, at 6,014.03, snapping a three-day losing streak.

Banks were the standout gainers after falls on Monday, led up by Barclays which rose 5.5 per cent. Societe Generale named the lender one of its preferred stocks in the European sector which it upgraded to “overweight”.

Global banking heavyweight HSBC put on 2.4 per cent after Citigroup upgraded it to “buy” from “hold”.

Traders said European sovereign debt fears faded after Portuguese Finance Minister Fernando Teixeira dos Santos said there was no plan to seek a bailout from the EU and IMF.

“That’s put a bit of happiness back in the market, and seems to have calmed everyone’s fears for the moment, but who knows what’s around the corner,” said Mark Priest, senior equities trader at ETX Capital.

Buyers came in for miners as metal prices rebounded, and after aluminium producer Alcoa kicked off the US fourth-quarter earnings season with profits topping Wall Street forecasts.

Paul Kavanagh, a partner at Killik & Co, envisages the FTSE 100 index falling back below the 6,000 level this month after strong recent gains, though has a 6,600 end of year target.

“You’ve got the earnings numbers coming through in the US, which should be positive... but I just feel that this market has moved quite a long way, so it could just boil over a little bit as we head in towards the last part of January,” he said.

Energy stocks were in demand, following crude prices higher, with BP advancing 2.8 per cent.

Positive broker sentiment helped oil explorer Cairn Energy, up 5.5 per cent, as Morgan Stanley resumed coverage as “overweight”, while plumbing supplies firm Wolseley, up 5.9 per cent, was aided by a Citigroup target price hike.

ARM Holdings topped the blue chip leader board, adding 7 per cent, with traders citing rehashed bid talk.

Smith & Nephew was the biggest FTSE 100 faller, off 5.9 per cent after the maker of replacement knees and hips hit a record high on Monday on a report it received a bid last month from Johnson & Johnson, which was not disclosed.

Investec downgraded its rating for S&N to “hold” from “buy” saying the lack of comment from either company yesterday seems to suggest that a bid is not pending in the short term.

Capital Shopping Centres shed 2.8 per cent after stakeholder Simon Property said it would not bid to buy the largest British mall owner.

Retailer Marks & Spencer also fell 2.8 per cent, disappointing investors with its trading update. Arden Partners analyst Nick Bubb said he was “underwhelmed, but not downhearted” and retained a “buy” rating.