New Year boom sees FTSE lifted over the 6,000 mark

BRITAIN’S top shares rose sharply yesterday, the first session of 2011, lifted back above the key 6,000 level by heavyweight oil stocks and banks, as solid economic data prompted a return of investor risk appetite.

Fresnillo, the Mexican silver miner, jumped 85p to £17.53 on revived talk that billionaire Carlos Slim might be taking a look at the company.

The tale comes courtesy of the KingWorld News blog, but it is worth mentioning that the suggestion of interest in Fresnillo by Slim ­– said to be the richest individual in the world thanks to his telecoms and cement empire – has been kicking around for several months now.

The FTSE 100 ended up 113.93 points, or 1.9 per cent, at 6,013.87, its highest close since the start of June 2008, easily recovering the 1.2-per cent loss it suffered on New Year’s Eve.

Yesterday’s advance followed strength from US and European markets on Monday when London was closed.

Trading volumes came back to more normal levels after the thin sessions seen over the holiday period, with 104 per cent of its 90-day daily average having traded.

BP was the standout blue-chip gainer, up 5.9 per cent at a seven-month high, after reports rival Royal Dutch Shell considered a takeover bid, and that economic damages from its oil spill will be lower than forecast.

Shell gained 1.1 per cent.

“We’re playing catch-up to the European markets which had a good start to the year ... the rally is being supported by some very good economic data,” said Angus Campbell, head of sales at Capital Spreads.

Data yesterday showed that British manufacturing activity grew at its fastest pace in more than 16 years in December, complementing data from the US on Monday showing its manufacturing sector grew for a 17th consecutive month in December.

Meanwhile China’s factory inflation cooled in December, while manufacturing in Europe accelerated.

Buyers came in for the banks, as worries over Eurozone sovereign debt faded further into the background, with Barclays adding 4.2 per cent and Royal Bank of Scotland up 4.1 percent.

An Exane BNP Paribas upgrade to “outperform” also helped RBS, with the broker saying a sharp sell-off on the bank’s exposure to debt-hit Ireland presents a buying opportunity.

Among individual blue-chip gainers, Carnival took on 3.8 per cent after being upgraded to “buy” from “hold” by Deutsche Bank with an increased target of 3,700 pence.

The main losers were stocks seen as defensive. Food producer AB Foods was down 1.4 per cent, while utility International Power slipped 1.5 per cent.

Oil prices dipped as the US Monday rally was corrected and investors soldoff commodities.