FTSE 100 hits six-month high on US and European results

Britain’s leading shares surged to a six-month closing high yesterday, led by miners, as UK investors were buoyed by strong earnings in the US and Europe, but TUI Travel fell after reporting accounting errors.

Europe’s largest travel firm TUI Travel slumped more than 11 per cent after it revealed its finance chief would quit and it restated 2009 accounts after stumbling across £117m in overstated bookings.

The benchmark FTSE 100 closed up 28.93 points, or 0.5 per cent, at 5,757.86, after rising 0.4 per cent on Wednesday, and finishing at its highest level since 20 April.

The index has risen 10 per cent in about seven weeks since the beginning of September.

Appetite for risk was in abundance as strong corporate earnings and solid data from China supported confidence the global economic recovery was sustainable.

Miners, supported as metal prices held near recent highs, added most gains to the FTSE, with Anglo American up 2.5 per cent after releasing third-quarter earnings.

“The giddying effects of the expectation of forthcoming stimulus from the Federal Reserve, as well as good earnings figures... are proving to be a heady cocktail for investors,” said CMC Markets analyst Michael Hewson.

Solid third-quarter results on both sides of the Atlantic lifted confidence that equities would be resilient in the face of economic adversity.

Beverage maker Diageo climbed 2.3 per cent after French peer Pernod Ricard posted a 10 per cent jump in underlying sales in the last quarter, helped by a pick-up in demand in the United States.

“It underscores the idea that you can go to defensive stocks for growth. They are on undemanding ratings, and many are growing their dividends,” said Andrew Bell, chief executive of investment trust Witan.

British Airways, up 0.9 per cent, was buoyed by strength from peers in the United States. Delta Air Lines, US Airways Group and American Airlines parent AMR all posted strong results.

Despite TUI Travel’s troubles, overall there was confidence in the sector, with InterContinental Hotels up 3.7 per cent after French peer Accor raised its 2010 profit goal on Wednesday and posted third-quarter sales slightly above forecasts.

Consumer goods firms Unilever, Reckitt Benckiser and Associated British Foods rose 2.4 to 3.9 per cent, benefiting from strong third-quarter results from French food group Danone.

BT Group was up 4.1 per cent after a court backed the firm’s pension trustees in a dispute with the government over a state guarantee to cover liabilities if it goes bust.

On the downside, GlaxoSmithKline shed 1.3 per cent as it said earnings slipped 1 per cent in the third quarter, hit by the cost of writing off stocks of its controversial diabetes drug Avandia and increased generic competition for herpes drug Valtrex.