MINERS and banks drove Britain’s top share index to a 30-month closing high yesterday, as risk appetite rose due to easing tensions on the Korean peninsula and upbeat earnings from US software maker Adobe Systems.
The FTSE 100 index ended up 60.19 points, or one per cent, at 5,951.80, its highest close since early June 2008, albeit in thin trade in the run-up to the Christmas holidays.
Miners rose, with Anglo American and Xstrata the best sector performers, up 4.2 per cent and 3.5 per cent respectively, as copper hit record highs, fuelled by supply concerns.
Gains in metals prices were also underpinned by import data showing continued strong demand from top consumer China, prompting more speculation on the global growth story.
Rio Tinto climbed 2.6 per cent amid media reports that it is talking to Australia-listed coal miner Riversdale about a higher $3.8bn takeover, ahead of a possible bidding war. Traders said investor nerves were soothed as the situation on the Korean peninsula failed to escalate. South Korea held live-fire drills on Yeonpyeong island on Monday, raising fears of all-out war, but the North did not retaliate.
Integrated oil stocks found favour as the crude price rose, supported by cold weather conditions, with Royal Dutch Shell climbing 1.6 percent.
Banks rebounded after recent weakness caused by Eurozone debt exposure fears. Comments from a Chinese vice-premier that it supports efforts by the EU to calm global markets in the wake of the debt crisis helped ease concerns. Royal Bank of Scotland was the top FTSE 100 riser, up 4.5 per cent. Carnival was another strong gainer, up 3.7 per cent, on higher earnings and forecasts.