Investor hopes over possible Spain bailout prop up shares on the FTSE

BRITAIN’S FTSE 100 share index closed up yesterday, recovering from an earlier two-month low in late trade on renewed hopes that Spain will ask for a bailout, a move which is seen as an essential step towards solving the Eurozone crisis.

Spanish bond yields fell and its main bourse index rallied on the expectations that Spain will make the formal request for help which is needed to start the European Central Bank’s sovereign bond-buying rescue plan. However, there seemed to be no fresh news behind the shift in market sentiment, with traders saying that thin volumes exaggerated the moves.

“There is rumour that Spain is getting its bailout,” said Steve Larkins at Seymour Pierce. “They’ve got to do something, Europe has got to sort itself out.”

The FTSE 100 finished up 18.98 points, or 0.3 per cent, at 5,786.25, rebounding off a two-month intra-day of 5,710.99 points and climbing back above the key technical support level of the 200-day moving average around 5,729.19.

Earlier Vodafone had unveiled a £5.9bn writedown on the value of its business in Spain and Italy and lowered its full-year outlook. Shares in the mobile phone operator, the third biggest company in the FTSE 100, closed down 2.5 per cent in more than three-times the 90-day average daily volume.

On the flip side, ITV was the biggest gainer on the FTSE 100, adding nine per cent after the broadcaster said its net advertising revenue for the year will outperform the wider television market.