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Economic cheer sees FTSE break through 4,500 barrier

THE FTSE 100 ended 2 per cent, or 88.25 points, higher yesterday at 4,506.19 as some unusually upbeat data saw optimism about the global economy rise.<br /><br />Mining stocks led the charge, as metal prices firmed, bolstered by hopes for increased demand particularly following bullish Chinese data.<br /><br />China&rsquo;s official purchasing managers index for May stayed above 50, the level which separates contraction from expansion, for a third straight month. <strong>Xstrata, Vedanta Resources, Anglo American, Lonmin, BHP Billiton</strong> and <strong>Rio Tinto</strong> gained between 5.3 to 9 per cent.<br /><br />Data closer to home also showed signs the economic slump may be easing.<br /><br />The UK manufacturing sector contracted at its slowest pace in a year in May, although the market was expecting a healthier reading.<br /><br />Crude oil prices pushed to a seven-month high, sending shares in <strong>BP, Royal Dutch Shell</strong> and <strong>BG Group</strong> up 1.7 to 2.7 per cent.<br /><br />Between them, miners and petrochemicals added 50 points to the large cap index.<br /><br />Banks rallied after recent falls, with <strong>Barclays, Royal Bank of Scotland, Standard Chartered</strong> and <strong>Lloyds Banking Group</strong> up 1.0 to 6.6 per cent.<br /><br />But <strong>HSBC</strong> missed out, losing 0.8 per cent, after the Saudi central bank ordered domestic lenders to freeze bank accounts of businessman Maan al-Sanea, one of the country&rsquo;s wealthiest businessmen and recently a big shareholder in HSBC.<br /><br />Speculation on the market that <strong>Persimmon</strong> was considering a rights issue did little to hurt the share price. The property developer gained 5 per cent to close at 17.75p &ndash; but later told CityA.M. that it had no intention of tapping the market for cash.<br /><br />Life insurers and other financials rose, with Legal &amp; General up 7.8 per cent, <strong>Old Mutual</strong> ahead 7.0 per cent and <strong>Man Group</strong> up 5.9 per cent.<br /><br />Non-life insurers were weak, however, with blue chip Amlin and mid-cap peers <strong>Catlin</strong> and <strong>Novae Group</strong> down 2.0 to 5.6 per cent as Numis downgraded all three stocks in a sector review, cutting estimates and targets across the board due to the impact of dollar weakness on US profit.<br /><br />Defensive issues were unwanted as investors&rsquo; risk appetite returned, with gas distributor <strong>Centrica</strong> the top FTSE 100 faller, down 3.5 per cent, while power generator <strong>Drax</strong> lost 1.8 per cent, contract caterer <strong>Compass Group</strong> fell 2.2 per cent, and food retailer <strong>Tesco</strong> lost 1.5 per cent.