Financial stocks have powered ahead today after good economic news from the US and a reduction in concerns over Greece’s debt prompted a market rally.
Lloyds, Barclays and RBS, the UK’s three biggest banks, have provided firepower to the FTSE 100, leaving it 0.7 per cent higher at the close, at 5,989.76 and bringing it within reach of the critical 6,000 market.
News that European policymakers will approve Greece’s next bailout tranche has combined with positive US manufacturing data to push investors back into equities.
“The air of ‘crisis? what crisis?’ continued in stock markets today with another positive performance helped in no mean way by a stunning start to US trading,” said IG Index senior sales trader Yusuf Heusen.
CMC Markets analyst Michael Hewson said the market had chosen to ignore softer data out of China and Europe and focus on the positives to continue the firmer tone.
The three banks all gained more than three per cent while interdealer broker Icap topped the risers, up 5.1 per cent, after gaining more than nine per cent in the morning’s trading.
Market commentators struggled to attribute the sudden gain, but Espirito Santo analyst Phil Dobbin said reports of bid speculation were unlikely to be behind it.
Dobbin said the rise probably followed material overselling recently, returning it to in line with its moving average, from below it previously.
Fund manager Schroders and hedge fund group Man were also up 2.3 per cent each.
Industrial metals miners also gained ground as risk appetite returned, led by ENRC, which added 2.4 per cent.
Packaging maker Rexam also gained 3.2 per cent.
Retailers and service providers lost out from the rally, however, with fashion retailer Next down 1.1 per cent and WM Morrison supermarket off by one per cent.
Telecoms companies BT and Vodafone each lost about 0.7 per cent.
“Vodafone is slightly lower after announcing that its tax dispute liability in India may be slightly higher than originally envisaged,” said Hewson.
But precious metals miners Randgold Resources and Lonmin suffered as the increased risk appetite pulled investors out of gold and silver, causing prices to fall.
US markets also gained ground on the back of the positive economic reports.
Stocks are on track for their best week in nearly a year in a fifth day of positive momentum as the good economic data eased fears over the US recovery.
Ford Motor shares have risen 1.3 per cent after the carmaker said its sales shot up 14 per cent in June.
General Motors shares gained 0.5 per cent after the company reported a weaker-than-expected gain in June US sales. But GM sees that tepid growth as "temporary," its US sales chief Don Johnson told reporters.
But Eastman Kodak has fallen 14.5 per cent after a US trade panel upheld portions of a ruling unfavourable to the company in a patent fight over digital camera technology in cell phones.