BANKS and commodity stocks helped Britain’s top share index break a three-day losing streak yesterday, as upbeat corporate results from Burberry, SAB Miller and Rio Tinto lifted investor sentiment.
The FTSE 100 index closed up 70.73 points, or 1.2 per cent, at 6,056.43, eradicating losses sustained over the previous three trading days.
Banks were among the top gainers as EU finance ministers inched closer towards beefing up the euro zone's rescue fund.
Risk sentiment was helped as investors cheered results from London’s blue chip companies.
In a strong mining sector, Rio Tinto rose 1.5 per cent after a record-breaking production update.
“Investors are gushing at what they have seen so far from some of the companies both in the UK and the US,” Jimmy Yates, head of equities at CMC Markets, said.
“The hope is that they will continue to outperform and shrug aside macro economic concerns.”
Commodities were also helped by a weaker dollar, which waned after upbeat business data from Germany.
Energy stocks were particularly strong, although India-focused refiner and power generator Essar Energy fell 4.4 per cent after it launched a $500m, five-year convertible bond issue.
Luxury goods firm Burberry topped the list of FTSE 100 risers, up 5.3 per cent after forecasting full-year profit at the top end of market expectations and beating third-quarter revenue forecasts.
Brewer SABMiller rose 1.7 per cent, beating forecasts with a three per cent rise in quarterly volumes.
The broad-based rally stretched to defensively-perceived utility companies, with Severn Trent and United Utilities up 2.1 and 1.3 per cent respectively after Evolution Securities upgraded both stocks.
On the downside, GlaxoSmithKline shares extended losses, falling a further two per cent after shedding 1.6 per cent on Monday when the drugmaker announced a £2.2bn legal charge that will wipe out profits in the fourth quarter.
The UK blue chip index briefly pared gains after British consumer price inflation rose more than expected, adding to expectations that interest rates may need to rise.
“By just hoping that prices will come back down in a year’s time in not going to mean they will, so the Bank of England must act to tackle inflation before it gets out of control,” Angus Campbell, head of sales at Capital Spreads, said.
“The economy is on a much stronger footing than a year ago and can withstand a couple of quarter percentage hikes in rates.”
In the United States there was mixed data for investors to chew on as a gauge of manufacturing in New York State rose less than expected.
Meanwhile, US homebuilder sentiment in January was flat at a low level for the third month in a row. And Citigroup disappointed investors after revealing fourth quarter results that missed estimates.