Mounting hope of an Irish bailout drives up the FTSE

BRITAIN’S top share index closed higher yesterday, boosted by banks on growing hopes for a deal to ease Ireland’s debt crisis and by mining stocks which followed metals prices higher.

The FTSE 100 closed 76.15 points, or 1.3 per cent, firmer at 5,768.71, in light volume, trading 85 per cent of its 90-day average.

The index rose 0.2 per cent in the previous session, having recorded its biggest one-day percentage fall in three months on Tuesday.

“I think we’re probably close to getting things resolved in Ireland but I’m not pinning too much on the market bouncing back,” Manoj Ladwa, senior trader at ETX Capital, said.

“It could just be a dead cat bounce recovering some of the losses we saw a couple of days ago,” he said.

Ireland’s central bank chief said he expected Dublin to receive tens of billions of euros in loans from European partners and the IMF to provide contingency capital for its shattered banks.

Sentiment surrounding banking stocks was buoyed, with Lloyds Banking Group the best off, putting on 1.9 per cent.

Further brightening the mood, government statistics showed new US claims for jobless benefits barely rose last week and manufacturing activity in the country’s Mid-Atlantic region touched a near one-year high in November, ging investors more proof that the economy was regaining some momentum.

UK data, meanwhile, painted a mixed picture of the economy, with British retail sales volumes picking up in October, while public borrowing hit a record high for the month.

The upbeat US economic data along with the easing Irish debt worries underpinned demand expectations for industrial metals, boosting metals prices and having a positive knock-on effect on mining stocks.

Fresnillo was the second-top FTSE 100 riser, up more than 5 per cent, with Rio Tinto another good gainer, 3.2 per cent ahead.

But SABMiller grabbed the top spot on the blue chip leader board, up 5.1 per cent after a strong recovery in emerging markets helped the brewer beat forecasts with a 16 per cent rise in half-year earnings.

British Airways added 4.4 per cent after solid results from Air France-KLM boosted optimism in the sector.

Positive broker sentiment helped InterContinental Hotels, up 3.4 per cent, with Nomura repeating its “buy” stance on the stock ahead of a strategy day on 23 November. Nomura said the firm “is well placed to execute on long-term growth strategy”.

On the downside, Intertek shed 6.3 per cent after the testing equipment firm issued a cautious update, prompting Seymour Pierce to cut its rating to “hold”.

And outsourcer Capita fell 4.4 per cent after the firm’s quarterly trading update, with Execution Noble saying in a note a lack of new contracts would put downward pressure on 2011 top-line expectations.