AIN’S leading share index took on 0.7 per cent yesterday, as heavyweight mining issues rallied with firmer metal prices, while banks moved higher awaiting further earnings news from US peers.
At the close, the FTSE 100 index was 39.02 points higher at 5,494.39, albeit in subdued trade with US markets closed for Martin Luther King day.
“Investors took the opportunity to squeeze the market higher in the absence of any US interest, but with a welter of earnings news to come this week the trend might not be your friend for long,” said Mic Mills, senior trader at ETX Capital.
Miners provided the main strength for the UK blue chips, boosted by a rally in metal prices, which recovered as demand worries ebbed away and recent dollar strength faded.
The sector shed 3.8 per cent last week after weaker-than-anticipated data from China and the United States. Eurasian Natural Resources, Anglo American, Kazakhmys, Xstrata, Vedanta Resources, Lonmin and Rio Tinto gained 0.7 to 3.9 per cent.
Oil majors were modestly higher as the crude price took on 0.5 per cent, with Royal Dutch Shell and BG Group both up 0.1 per cent, but BP ending flat.
Explorer Tullow Oil added 2.2 per cent on news it has dropped a plan to sell up to half its Ugandan oil fields assets and was pre-empting partner Heritage Oil's sale of its half share in two blocks to Italy's Eni.
Midcap Heritage Oil was up 7.4 per cent on the pre-emption move. “There is virtually no downside for Heritage as Tullow needs to at least match the Eni bid,” broker Arbuthnot said.
Banks found support as well, shaking off concerns over US peer JP Morgan's slightly disappointing results on Friday with plenty more earnings to come in the sector this week.
Citigroup reports fourth-quarter numbers today, Bank of America and Morgan Stanley tomorrow, and Goldman Sachs on Thursday.
Lloyds Banking Group, Barclays, Royal Bank of Scotland and Standard Chartered gained 0.6 to 3.2 per cent. But sector heavyweight HSBC missed out, shedding 0.5 per cent.
International Power saw earlier M&A-fuelled gains disappear, with the stock ending 3.4 per cent lower after the generator confirmed it had held talks with France's GDF Suez regarding an asset combination but that no agreement had been reached and discussions were no longer ongoing.
International Power shares had been the top FTSE 100 riser, up as much as 9.8 per cent to a 15-month peak after a report said GDF Suez may make a bid for the British firm.
Elsewhere on the downside, defence companies were weaker after BofA Merrill Lynch took a more cautious view on the sector in a review of European Aerospace issues.
BAE Systems and Cobham fell 0.9 and 0.5 per cent respectively as both were downgraded by Merrill to “neutral” from “buy”.
BSkyB was also a big FTSE faller, losing 1.1 per cent after a report said regulator Ofcom is planning to force the satellite broadcaster to reduce the charges it levies on rivals for using its Sky Sports channels.
Satellite communications firm Inmarsat shed 0.3 per cent as Goldman Sachs cut its rating to “neutral” from “buy” in a review of the European telecoms sector.
Sterling reached a four-month low against the euro as the dollar, helped by asking prices for houses in England and Wales, rose an annualised 4.1 per cent in January.