FTSE 100 rebounds as banks rally and miners pare losses

BRITAIN’S top shares rallied yesterday after employment data from the US showed the economic recovery was picking up steam, which helped miners and oil stocks pare losses and banks rally.

The FTSE 100 closed up 29.99 points, or 0.5 per cent, at 6,043.86, bouncing off a session low of 5,964.43.

Miners pared losses and oil stocks rebounded, helping the FTSE 100 into positive territory after US private sector payrolls rose by the most in three years in November, lifting optimism about the job market ahead of Friday’s government employment report.

“The employment numbers were better than expected, welcome news and have provided a bit more confidence,” Martin Dobson, head of trading at Westhouse Securities, said.

“The market’s holding above 6,000 which is encouraging. It still feels as if it could push better. There’s not a lot of avenues other than equities where investors are getting a return on their money.”

Westhouse’s Dobson said the boost to the economic outlook provided by the payroll figures also aided the banks.

The sector had earlier received a shot in the arm after the Portugal saw solid demand at a sale of six-month t-bills, a sign that some investors still had confidence in the Portuguese economy.

UK retailers were mixed after Next, HMV and Games Workshop all reported that Britain’s arctic blast in the lead up to Christmas had hit trading. Next said sales at shops open at least a year fell 6.1 per cent in the 21 weeks to 24 December. However, Next’s shares rose 4.4 per cent as traders pointed towards the performance of its online offering as a reason to be optimistic.

“I think there seems to be a trend going towards online -- certainly over the Christmas period when everyone was snowed in,” Manoj Ladwa, senior trader at ETX Capital, said.

He added that mid-cap online grocer Ocado, up 1.6 per cent, could be helped by a read-across from a Waitrose trading update.

However, small-cap music and games retailer HMV plunged 20 per cent after it said snow and sub-zero temperatures deterred shoppers.

And Games Workshop fell 11.8 PER cent after warning on its full-year profits.

On the upside, technology company ARM Holdings topped the blue-chip leader board, up 7.7 per cent, boosted ahead of a high-profile trade fair in the United States and bid talk in the sector. Mid-cap peer CSR jumped 7.8 per cent, with Seymour Pierce saying M&A could lead the market to refocus on the discount that CSR trades at compared to some of its peers.

London’s blue chips kicked off 2011 with a 31-month closing high on Tuesday, up 1.9 per cent, and traders said they saw the broad upward trend being kept intact.