FTSE rallies on strong corporate news

Strong corporate earnings data have pulled stocks back to levels prior to Japan’s earthquake and tsunami crisis today despite fresh unrest spreading in the Middle East.

The FTSE 100 closed up 0.34 per cent at 5,900.76 as traders bought into undervalued stocks and positive broker notes while remaining unfazed by geopolitical issues.

“The speed of recovery in stock prices has done much to rejuvenate investor optimism and it has been quite telling that the UK index has not taken long to break through resistance levels on its way higher,” said City Index market strategist Joshua Raymond.

“Of course, the sharp recovery does open the door for bouts of profit taking but as long as investors perceive share price falls as buying opportunities, the FTSE could make a retest of the 6100 level in the near term.”

Software developer Invensys topped the risers board, up 3.5 per cent to close at 353.1p, as it bounced back from worries over the departure of its chief executive Ulf Henriksson.

Other risers included Cillit Bang maker Reckitt Benckiser, up 3.1 per cent to 3,160p after Bank of America Merrill Lynch upgraded its rating to “buy”; and engineer GKN, up two per cent to 198p.

Miners also boosted the index, with Mexican silver producer Fresnillo up 1.8 per cent to 1560p.

But broker updates also hit companies on the downside: biggest faller Autonomy was on the receiving end of a JPMorgan note cutting its full-year 2012 earnings estimate for the software firm, citing deteriorating earnings quality.

And UK retailers continue to experience turbulence, with CMC Markets analyst Michael Hewson saying that Marks and Spencer, B&Q owner Kingfisher and Next all lost ground after yesterday’s surprise gains.

Oil major BP fell this morning after its Russian plan to co-explore with Rosneft received another setback with the extension of an injunction to prevent strategic partnership granted to its disgruntled Russian joint venture partner AAR.

But it regained ground yesterday as investors viewed it as a buying opportunity, and closed up 0.55 per cent at 483.55p.

Life insurance fund consolidator Resolution fell 2.6 per cent to end at 281.80 despite saying some of its £1bn cash pile may be returned to investors this year.

And television broadcaster ITV fell for a second day, down 2.2 per cent to finish at 80.65p, after analysts said its model was threatened by the use of the internet to watch programmes.

In the US, stellar results by software giant Oracle caused the markets to open higher though BlackBerry maker Research in Motion remained in the red all day as investors feared its devices and operating systems will be unable to match Apple and Google’s.

All three major stock indexes look as if they may post gains for the week after two straight weeks of declines, with the S&P 500 on track to notch up its best week in eight.

Oracle jumped 3.3 per cent to $33.20 (£20.50) and has been the Nasdaq's most actively traded name a day after forecasting a rise in new software sales for its current fiscal quarter.

“Apple shares were also in focus today with the launch of the iPad 2 in the UK,” Hewson said.

At 4pm local time, the Dow Jones industrial average was up 41.13 points, or 0.34 percent, at 12,211.69. The S&P 500 Index was up 3.8 points, or 0.29 per cent, at 1,313.46. The Nasdaq Composite Index was up 7.45 points, or 0.27 per cent, at 2,743.87.