FTSE shrugs off Egypt drama and rises on upbeat US data

COMMODITY stocks and banks helped drive Britain’s top share index to a higher close yesterday, as investors shifted their focus from political unrest in Egypt to upbeat US economic data.

The FTSE 100 index closed up 94.88 points, or 1.6 per cent, at 5,957.82, recouping nearly all the 1.7 per cent lost over the previous two sessions on the fallout from Egypt.

The mood was brightened after data showed that the US manufacturing sector expanded in January at its fastest pace since May 2004, and that prices paid jumped more than expected.

Buyers came in for miners after copper hit a record high, helped by the strong US data and a backdrop of constrained supply.

Copper miners Kazakhmys and Antofagasta were among the top blue-chip risers, up 4.8 and 4.7 per cent.
At least 1m people rallied across Egypt yesterday clamouring for President Hosni Mubarak to give up power.

“The first (market) reaction (to such situations) is naturally caution. It then takes 24 to 48 hours (for proper analysis) and I think having come through that exercise, the market has become ‘comfortable’ the impact won’t necessarily be too bad,” Paul Kavanagh, a partner at Killik & Co, said.

Energy stocks were in demand as oil hovered around $101 per barrel yesterday, after a rally on Monday supported by port disruptions in Egypt, a weakening dollar and concerns about the growing social unrest in north Africa.

BP rebounded 1.3 per cent. Traders said its share price fall earlier in the session, in reaction to the oil company’s below-forecast profit, was overdone.

The oil major said it was watching Egypt carefully, while the head of the International Energy Agency said the global oil market does not face any emergency as Brent crude pushed beyond $100.

Investors shrugged off a UK court injunction halting BP’s planned Arctic exploration partnership with Rosneft, Russia’s state oil group.

Technology stocks were hot picks among investors, with Autonomy up 6.3 per cent after the enterprise search software maker reported fourth-quarter results which analysts said should provide near-term support for the shares.

ARM Holdings rose 6.1 per cent after the British chip designer’s fourth-quarter results beat expectations, leading Numis Securities to raise its target price.

Risk-sensitive banks firmed, with Standard Chartered up 2.8 per cent, helped by Exane BNP Paribas upgrading its rating to “outperform” from “underperform”.

“I think the (fears over Egypt) have dwindled a bit. Sentiment is definitely on the up,” Mark Priest, senior equities trader at ETX Capital, said.

“The ISM (U.S. manufacturing) data has generally added to a rally in the US. With the Dow rallying, I think we’ll always see the FTSE follow on.”

Travel firms InterContinental Hotels and TUI Travel shed 0.9 and 0.6 per cent respectively, while midcap Thomas Cook dropped 1.4 per cent.

Manufacturing activity grew at a record pace in January and price pressures also picked up, reigniting speculation the Bank of England may have to raise interest rates sooner rather than later to tame inflation.

The Markit/CIPS purchasing managers’ index showed factory activity, employment and new orders all grew at their fastest clip since the survey began almost 20 years ago.