FTSE rallies after banks and retailers deliver good news

THE UK’s top share index closed higher yesterday, boosted by retailers and banks after a sell-off on Tuesday described as “overblown”.

At the close, the FTSE 100 was up 45.97 points, or 0.8 per cent at 6,010.44, recouping half of Tuesday’s 1.5 per cent drop and recapturing the 6,000 level.

Banks gained after better-than-expected results from US peer JPMorgan provided hope that the earnings season might hold some more positive surprises.

“There is a long way to go, but the earnings compass has swung back to positive today, helping fuel the market rally. However, with low volumes and the Easter holidays approaching, the needle is likely to continue to bounce around,” said Mic Mills, head of electronic trading at ETX Capital.

JPMorgan saw its first-quarter earnings per share top analysts’ forecasts, with its closest British peer Barclays adding 1.6 per cent.

Lloyds Banking Group rose 0.6 per cent after recent falls, helped by positive comment from UBS, which added the bank to its “key calls list” on valuation grounds.

Lloyds shares had hit nine-month lows to trade below its 20-day moving average after an Independent Commission on Banking (ICB) proposed the sale of hundreds more of its branches.

Also on the rise were the UK’s retailers after online fashion portal ASOS and sports retailer JD Sports boosted the sector with strong results. ASOS shares closed up 14.3 per cent after it forecast 2010-11 profit towards the top end of market expectations.

JD Sports beat expectations with a 21 per cent rise in underlying 2010-11 pretax profit to £81.6m and hiked its dividend 28 per cent.

However, its shares, up 28 per cent over the past year, fell 7.1 per cent as, in common with other British retailers, it said it was “extremely cautious” about the outlook for 2011-12 following January’s rise in VAT sales tax, rising youth unemployment and higher input costs.

Integrated oils rose, led by Royal Dutch Shell ahead 0.8 per cent, as crude prices rose after two days of losses. BP added 0.9 per cent ahead of its annual general meeting today, shrugging aside concerns over its share swap deal with Russia’s Rosneft.

Miners were mixed after falls on Tuesday when Goldman Sachs said the recent rise in commodity prices had run its course.

Rio Tinto added 0.1 per cent, recovering from an initial fall after a production update.

Chip designer ARM Holdings was the top FTSE 100 gainer, ahead 6.8 per cent, with traders citing a bullish note from Morgan Stanley.

After a presentation by Microsoft in Las Vegas, showcasing a version of Internet Explorer 10 running on an ARM-based processor, traders said the broker was “positively surprised that software development is already well advanced.”

And consumer products firm Reckitt Benckiser rose 4.2 per cent after Bernstein upgraded its rating.

On the downside, insurer Old Mutual fell 4.3 per cent as it traded ex-dividend, and with technical analysts at Charles Stanley suggesting the stock is likely to remain under pressure.

Ex-dividend factors knocked 2.43 points off the FTSE 100, with Aggreko, BG Group, Capita, IMI, Tullow Oil, and John Wood Group all losing their payout attractions.