Fading Eurozone fears push banks up while bid activity sends BSkyB higher

A RALLY by banks, fuelled by demand in European bond auctions on easing debt concerns, helped Britain’s top share index higher yesterday, with BSkyB up after an approach by News Corp.

The FTSE 100 closed up 15.69 points or 0.3 per cent at 5,217.82, the highest closing level since 15 May, and taking its winning streak into a fifth straight session.

“It has been another cautiously positive day for shares in London with further gains across a mix of sectors,” said Yusuf Heusen, senior sales trader at IG Index.

Banks were the best performers as the sector, which potentially has a large exposure to Europe’s debt crisis, rallied in volatile trade. Barclays, Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered added 1.0 to 2.4 per cent.

Successful bond auctions in Spain, Belgium and Ireland helped eased anxiety over the eurozone debt situation caused by Moody’s downgrade of Greece’s debt to junk status on Monday. Sentiment was also lifted by a bigger than expected fall in British consumer price inflation in May, helped by lower food costs.

Miners underpinned the index as commodity prices firmed, with Kazakhmys, Eurasian Natural Resources, Anglo American, Rio Tinto and Lonmin up 0.1 to 1.2 per cent.

Energy blue chips BG Group and Royal Dutch Shell added 0.6 and 0.1 per cent respectively, helped by a stronger crude price.

But overall the oil sector was dragged back by BP, which was buoyed by bargain hunters early on but was off 3.8 per cent at the close in volatile trade.

Among individual gainers, pay-TV firm BSkyB soared 16.6 per cent after it rejected a proposal by News Corp.