Goldman Sachs backs banks and helps to lift the markets

THE FTSE 100 closed 0.9 per cent higher yesterday, led by gains in banks and miners which recovered from losses in the previous session, while data showed inflation held steady in July.<br /><br />The large-cap index closed 40.77 points higher at 4,685.78, recovering from a 1.4 per cent drop on Monday, its biggest one-day percentage loss since 2 July.<br /><br />&ldquo;We are starting to see tangible signs that the aggressive monetary and fiscal stimulus policies are starting to work and the corporate results continue to be better than expected,&rdquo; said Henk Potts, equity strategist at Barclays Stockbrokers.<br /><br />Banks added the most points to the index, as appetite for risky assets intensified. <strong>HSBC</strong> climbed 2.8 per cent as Goldman Sachs upped its rating for the lender to &ldquo;buy&rdquo; from &ldquo;neutral&rdquo; with an increased target price of 820p.<br /><br />Goldman Sachs also provided a spur for <strong>Standard Chartered</strong>, which was up 2.1 per cent, as the broker raised its target price.<br /><br /><strong>Lloyds Banking Group</strong> and <strong>Royal Bank of Scotland</strong> put on 1.9 and 2.9 per cent respectively, but <strong>Barclays</strong> bucked the trend to edge down 0.1 per cent.<br /><br />RBS is believed to be looking at following Barclays and Lloyds Banking Group by selling part of its asset management arm.<br /><br />Miners were largely in positive territory, recovering from Monday&rsquo;s sell-off. <strong>Xstrata, Kazakhmys, Eurasian Natural Resources</strong> and <strong>Fresnillo</strong> rose 0.4 to 2.4 per cent.<br /><br /><strong>Rio Tinto</strong> found favour, rising 1.7 per cent, after the company agreed to sell its Alcan packaging unit to Australia&rsquo;s Amcor, easing its debt burden.<br /><br />Oil majors were mixed, as crude prices rose. <strong>BG Group, BP, Cairn Energy</strong> and <strong>Tullow Oil</strong> advanced between 0.5 and 2.5 per cent, while <strong>Royal Dutch Shell</strong> fell 0.3 per cent.<br /><br />Among individual risers, oil services and engineering group <strong>AMEC</strong> rose 4.4 per cent, the biggest gainer on the index, after Citigroup lifted the company&rsquo;s price target on an optimistic view on its margins.<br /><br /><strong>InterContinental Hotels Group</strong> climbed 3.5 per cent after Cazenove raised the company&rsquo;s rating to &ldquo;outperform&rdquo;.<br /><br />On the downside, <strong>British Land</strong> fell 2.7 per cent as investors took profits after a recent speculative run on the stock. The company&rsquo;s chief executive quelled speculation the company was a takeover target, as it posted a smaller-than-expected 9 per cent fall in first-quarter net asset value to 361 pence.