BRITAIN’S top share index bounced back yesterday on hopes for stronger global growth after an upbeat speech overnight by US President Barack Obama and positive US housing data.
The FTSE 100 closed up 51.50 points, or 0.9 per cent, at 5,969.21, after falling 0.4 per cent on Tuesday following news Britain’s economy shrank 0.5 per cent in the fourth quarter of last year.
“Concerns about growth prospects after yesterday’s rise in interest rates in India and the shock fall in UK GDP had seen some risk aversion, but this appears to have subsided for now,” said Michael Hewson, market analyst at CMC Markets.
Miners and energy companies were the standout performers on London’s blue-chip index, climbing on the back of the previous session's weakness along with metal and crude prices.
Chilean copper producer Antofagasta rose 3.3 per cent.
Oil major BG Group added 3.4 per cent, helped by its partner, Brazil’s state-run oil giant Petrobras, announcing an oil find in the Santos basin.
BP fell 1.1 per cent, with traders citing rating downgrades from Societe Generale and Collins Stewart.
“Capable crisis management reflected in recent strong outperformance - which we use to downgrade to ‘hold’ on valuation grounds,” SocGen said in a note.
Sentiment on the whole was boosted by favourable comments from Obama, who proposed cutting corporate tax rates in his annual State of the Union address on Tuesday night.
The US Commerce Department reported sales of new single-family homes rose 17.5 per cent in December.
“With the Federal Reserve unlikely to move away from its current easing policy at today’s meeting, markets are pushing towards the upper end of recent ranges,” CMC’s Hewson said.
In the UK, mobile phone heavyweight Vodafone gained 0.6 per cent after results from its US wireless joint venture with Verizon Communications.
Vodafone was also helped by news Vivendi completed the sale of its stake in NBC Universal, clearing the way for the French group to begin talks over acquiring Vodafone’s 44 per cent stake in French telecoms operator SFR.
Temporary power provider Aggreko was up 5.3 per cent, after Goldman Sachs initiated coverage on the company with a “buy” rating, saying it has “powerful potential”.
On the second line, Renishaw jumped 19.7 per cent after the British engineer reported a five-fold rise in first-half pre-tax profit.
Among the few blue-chip fallers were Compass Group and Scottish & Southern Energy, both going ex-dividend.