FTSE rises as commodities and financials set the pace

BRITAIN’S leading shares gained 0.9 per cent yesterday, boosted by strength in miners and oils, banks and life insurers, as upbeat US data lifted Wall Street.

At the close, the FTSE 100 was 49.15 points higher at 5,533.21, ending at a seven-week peak on its fourth straight session of gains.

“All the figures were pretty much positive today, with better than expected PMI numbers in the UK and US, and commodity issues boosted in the afternoon by crude inventories,” said Sam Wright, a trader at Spreadex.

“Volumes remain a bit below average, however, and with the US non-farm payrolls due on Friday, the market is just being squeezed higher,” Wright added.

Miners and oils provided the main strength for blue chips as a combination of positive data and a weaker dollar lifted commodity prices.

Among the miners, Lonmin, Xstrata, Anglo American, Rio Tinto, and Randgold Resources added 2.5 to 5.7 per cent as metal prices rose in their markets.

Kazakhmys, which issues a trading update on Thursday, and Antofagasta gained 4.8 per cent and 3.7, respectively, both buoyed by upgrades from Barclays Capital.

Energy issues moved higher as crude prices pushed up towards $81 a barrel, helped by a rise in US crude inventories. BP, BG Group, Royal Dutch Shell and Cairn Energy gained 0.4 to 0.7 per cent.

Banks were also in demand. Standard Chartered led the sector higher, up 5.3 per cent after the emerging markets-oriented bank posted in-line results and said 2010 started strongly.

Barclays, Lloyds Banking Group and Royal Bank of Scotland, meanwhile, put on 0.5 to 2.7 per cent.

An easing of concerns over the Greek debt situation also helped the sector as Greece’s cabinet approved new austerity measures designed to fight its budget deficit, moves seen as key to securing EU fiscal support.

But sector heavyweight HSBC missed out, falling 0.1 per cent, reversing the recovery it made on Tuesday which had followed a sharp post-results fall in the previous session.

Among life insurers, Prudential recovered 2.6 per cent higher, having fallen by around 20 per cent over the previous two sessions since agreeing a $35.5bn (£23.5bn) takeover of the Asian life business of AIG.

Market players also pointed to talk the fall in the share price may make it a takeover target for overseas companies.

Peers Legal & General, Aviva and Standard Life also rallied after recent falls, adding 2.3 to 5.1 per cent, as takeover hopes returned to the sector.

But sector predator Resolution fell 1.9 per cent.

US blue chips were 0.5 per cent higher by London’s close, buoyed by positive economic data.

The US services sector grew at its fastest pace in more than two years in February, while the ADP Employment report showed US private employers shed 20,000 jobs in February, matching consensus.

Britain’s services sector bounced back faster than expected in February to record its strongest expansion in more than three years, a PMI survey showed on Wednesday.

Among the fallers, investors booked profits in drugmakers following a recent strong run, with GlaxoSmithKline losing 0.4 per cent, while AstraZeneca ended flat.

British Airways shed 0.6 per cent after its February traffic numbers failed to excite.