BRITAIN’S leading share index staged its biggest one day really in three months yesterday, clawing back some of the losses made in the past three sessions, with commodities boosted by upbeat Chinese data and banks rallying after being hit by sovereign debt concern.
The rally was also boosted by hopes the European Central Bank (ECB) could step up its purchase of eurozone government bonds in a bid to support the borrowing needs of struggling states.
The FTSE 100 index gained 114.23 points, or 2.1 per cent, to 5,642.50, having ended November back at levels not seen since mid-September.
“There has been good news consistently across the globe, starting with the Chinese PMIs. UK manufacturing data was also much better than expected and the U.S. figures were good,” Mike Lenhoff, chief strategist at Brewin Dolphin, said.
China’s official purchasing managers’ index (PMI) climbed to a seven-month high in November, while British manufacturing activity last month unexpectedly rose to a 16-year high.
In the US, manufacturing grew for a 16th month and the private sector posted its largest jobs gain in three years.
Commodity stocks were big movers on the index, tracking firmer metal and crude CLc1 prices after the Chinese data suggested demand was robust.
Miners Kazakhmys, Antofagasta and BHP Billiton gained 3.4 to 5.3 per cent, while Xstrata jumped 5.8 per cent, also buoyed by a bullish note from Barclays Capital.
Oil stocks BG Group, BP and Royal Dutch Shell rose 0.9 to 2.7 per cent.
Banks were also in demand and featured among the top performers after being sold off in previous sessions on worries about the euro zone debt crisis.
British banks Royal Bank of Scotland, Barclays and Lloyds Banking Group rose 4.6 to 6.1 per cent.
Insurer Prudential gained 5.5 per cent after it announced plans to double new business profits in Asia by 2013.
Among individual risers, Sage Group was 5.3 per cent higher after the British accountancy software company's results beat full-year expectations.
Though the market moved higher, some traders were cautious.
“It certainly looks like there has been a base put under the market. Ultimately I think the stage has been set for the market to move higher, although uncertainty will keep something of a lid on it,” said Yusef Heusen, senior sales trader at IG Index.
BAE Systems slipped 1 per cent, knocked by a bearish sector note by Goldman Sachs, with the broker reiterating its “conviction sell” on the company. Ex-dividend factors accounted for the two heaviest FTSE 100 fallers, Severn Trent and National Grid, while Land Securities and Johnson Matthey lost their payout attractions yesterday.